CRIIMI MAE INC, 8-K, 1999-12-27

CRIIMI MAE INC
8-K, 1999-12-27
REAL ESTATE INVESTMENT TRUSTS

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

----------

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED): DECEMBER 27, 1999
(DECEMBER 23, 1999)

CRIIMI MAE INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<CAPTION>

MARYLAND 1-10360 52-1622022
<S> <C> <C>
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
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11200 Rockville Pike
Rockville, Maryland 20852
(Address of principal executive offices, including zip code, of Registrant)

(301) 816-2300
(Registrant's telephone number, including area code)

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ITEM 5. OTHER EVENTS

Attached as exhibits to this Current Report on Form 8-K are (1) a
Debtors' Amended Joint Plan of Reorganization filed by the Company and its
affiliates CRIIMI MAE Holdings II, L.P. and CRIIMI MAE Management, Inc. with the
United States Bankruptcy Court, District of Maryland, Greenbelt Division (the
"Bankruptcy Court") on December 23, 1999; (2) a Debtors' Joint Disclosure
Statement [Proposed] filed by the Company and its affiliates CRIIMI MAE Holdings
II, L.P. and CRIIMI MAE Management, Inc. with the Bankruptcy Court on December
23, 1999; and (3) a press release issued by the Company on December 23, 1999
announcing the filing of the Debtors' Amended Joint Plan of Reorganization and
the Debtor's Joint Disclosure Statement [Proposed]. Each of the above referenced
documents is hereby incorporated by reference herein.

ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

The following exhibits are filed as a part of this Current Report on
Form 8-K:

2 Debtors' Amended Joint Plan of Reorganization filed by CRIIMI
MAE Inc. and its affiliates CRIIMI MAE Holdings II, L.P. and
CRIIMI MAE Management, Inc. on December 23, 1999.

99.1 Debtor's Joint Disclosure Statement [Proposed] filed by CRIIMI
MAE Inc. and its affiliates CRIIMI MAE Holdings II, L.P. and
CRIIMI MAE Management, Inc. on December 23, 1999. (Exhibit A
to the Debtors' Joint Disclosure Statement [Proposed] (the
Joint Plan of Reorganization) has been filed separately
in this current Report on Form 8-K as Exhibit 2 (Debtors'
Amended Joint Plan of Reorganization) and is incorporated by
reference herein).

99.2 Press Release issued by CRIIMI MAE Inc. on December 23, 1999.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.

CRIIMI MAE Inc.

Dated: December 27, 1999 /s/ Susan Railey
---------------------------------
Susan Railey,
Vice President

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EXHIBIT INDEX

Exhibit
No. Description
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<S> <C>

*2 Debtors' Amended Joint Plan of Reorganization filed by CRIIMI MAE Inc.
and its affiliates CRIIMI MAE Holdings II, L.P. and CRIIMI MAE
Management, Inc. on December 23, 1999.

*99.1 Debtors' Joint Disclosure Statement [Proposed] filed by CRIIMI MAE Inc.
and its affiliates CRIIMI MAE Holdings II, L.P. and CRIIMI MAE
Management, Inc. on December 23, 1999.

*99.2 Press Release issued by CRIIMI MAE Inc. on December 23, 1999.
</TABLE>

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*Filed herewith.

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EXHIBIT 2

UNITED STATES BANKRUPTCY COURT
DISTRICT OF MARYLAND
GREENBELT DIVISION

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<S> <C> <C>
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)
)
In re )
)
CRIIMI MAE Inc., et al., ) Chapter 11
) Case Nos. 98-2-3115(DK)
Debtors. ) through 98-2-3117(DK)
) (Jointly Administered)
)
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</TABLE>

DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION

VENABLE, BAETJER AND HOWARD, LLP AKIN, GUMP, STRAUSS, HAUER
Richard L. Wasserman & FELD, L.L.P.
Gregory A. Cross Stanley J. Samorajczyk, P.C.
1800 Mercantile Bank and Trust Building Michael S. Stamer
Two Hopkins Plaza 1333 New Hampshire Avenue, N.W.
Baltimore, Maryland 21201 Washington, D.C. 20036
(410) 244-7400 (202) 887-4000

Co-Counsel to CRIIMI MAE Inc.
and CRIIMI MAE Holdings II, L.P.

SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A.
Morton A. Faller
11921 Rockville Pike
Third Floor
Rockville, MD 20852-2753
(301) 231-0928

Counsel to CRIIMI MAE Management, Inc.

Dated: Rockville, Maryland
December 23, 1999
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TABLE OF CONTENTS

Page
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I. INTRODUCTION ..................................................................................... 2
II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION ............................................ 2
A. Definitions ................................................................................. 2
1. Administrative Claim ................................................................... 2
2. Allowed Claim or Allowed Interest ...................................................... 2
3. Allowed Class...Claim .................................................................. 3
4. Allowed Class...Interest ............................................................... 3
5. Bankruptcy Code ........................................................................ 3
6. Bankruptcy Court ....................................................................... 3
7. Bankruptcy Rules ....................................................................... 3
8. Business Day ........................................................................... 3
9. Cash ................................................................................... 3
10. Claim................................................................................... 4
11. Class .................................................................................. 4
12. Class A9 Note .......................................................................... 4
13. Class A10 Cash Payment ................................................................. 4
14. Class A10 Note ......................................................................... 4
15. Clearing Systems ....................................................................... 4
16. Clerk .................................................................................. 4
17. CMBS Sale Portfolio .................................................................... 4
18. CMI .................................................................................... 4
19. CMI Common Stock ....................................................................... 4
20. CMI Equity Committee ................................................................... 4
21. CMI General Unsecured Claims ........................................................... 4
22. CMM .................................................................................... 4
23. CMM General Unsecured Claims ........................................................... 5
24. CMO-IV Bonds ........................................................................... 5
25. CMSLP .................................................................................. 5
26. Committees ............................................................................. 5
27. Confirmation ........................................................................... 5
28. Confirmation Date ...................................................................... 5
29. Confirmation Hearing ................................................................... 5
30. Confirmation Order ..................................................................... 5
31. Co-Proponent ........................................................................... 5
32. Debtor Releasees ....................................................................... 5
33. Debtors ................................................................................ 5
34. Debtors in Possession .................................................................. 5
35. Disbursing Agent ....................................................................... 5
36. Disclosure Statement ................................................................... 5
37. Disputed Claim ......................................................................... 6
38. Disputed Interest ...................................................................... 6

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39. Distribution Record Date ............................................................... 6
40. Docket ................................................................................. 6
41. DTC .................................................................................... 6
42. Effective Date ......................................................................... 6
43. Eligible Institution ................................................................... 6
44. Employee Claims ........................................................................ 6
45. Equity Committee ....................................................................... 6
46. Estates ................................................................................ 6
47. File, Filed or Filing .................................................................. 6
48. Final Order ............................................................................ 6
49. Freddie Mac ............................................................................ 7
50. Freddie Mac Agreement .................................................................. 7
51. GACC ................................................................................... 7
52. Guarantee Claims ....................................................................... 7
53. Holder ................................................................................. 7
54. Holdings ............................................................................... 7
55. Holdings General Unsecured Claims ...................................................... 7
56. Impaired ............................................................................... 7
57. Indemnitees ............................................................................ 7
58. Indenture Trustee ...................................................................... 7
59. Instrument ............................................................................. 7
60. Insurance Proceeds ..................................................................... 7
61. Intercompany Claims .................................................................... 7
62. Interest ............................................................................... 8
63. Letter of Transmittal .................................................................. 8
64. LIBOR .................................................................................. 8
65. Local Bankruptcy Rules ................................................................. 8
66. Merrill ................................................................................ 8
67. New Debt ............................................................................... 8
68. New Equity ............................................................................. 8
69. New Securities ......................................................................... 8
70. New Series C Preferred Stock ........................................................... 8
71. New Series D Preferred Stock ........................................................... 8
72. Old CMI Preferred Stock ................................................................ 8
73. Old Securities ......................................................................... 8
74. Old Senior Note Claims ................................................................. 8
75. Old Senior Notes ....................................................................... 8
76. Old Series C Preferred Stock ........................................................... 8
77. Old Series D Preferred Stock ........................................................... 9
78. Order .................................................................................. 9
79. Other Secured Claim .................................................................... 9
80. Person ................................................................................. 9
81. Petition Date .......................................................................... 9
82. Plan ................................................................................... 9
83. Plan Interest .......................................................................... 9
84. Plan Rate .............................................................................. 9

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85. Post-Petition Tax Claims ............................................................... 9
86. Priority Claim ......................................................................... 9
87. Priority Tax Claim ..................................................................... 9
88. Pro Rata ............................................................................... 10
89. Recapitalization Financing ............................................................. 10
90. Reorganization Cases ................................................................... 10
91. Reorganized CMI ........................................................................ 10
92. Reorganized CMI Articles of Incorporation .............................................. 10
93. Reorganized CMI Bylaws ................................................................. 10
94. Reorganized CMM ........................................................................ 10
95. Reorganized CMM Articles of Incorporation .............................................. 10
96. Reorganized CMM Bylaws ................................................................. 10
97. Reorganized Debtors .................................................................... 10
98. Reorganized Holdings ................................................................... 10
99. Second Amended and Restated Stock Option Plan .......................................... 10
100. Secured Claim .......................................................................... 11
101. Securities Claim ....................................................................... 11
102. Series B Prefererred Stock ............................................................. 11
103. Series F Dividend Preferred Stock ...................................................... 11
104. Stock Options .......................................................................... 11
105. Tendered Certificates .................................................................. 11
106. Tort Claim ............................................................................. 11
107. UCC .................................................................................... 11
108. Unimpaired ............................................................................. 11
109. Unsecured Claim ........................................................................ 11
110. Voting Record Date ..................................................................... 11
B. Interpretation and Computation of Time ...................................................... 12
1. Defined Terms .......................................................................... 12
2. Rules of Interpretation ................................................................ 12
3. Time Periods ........................................................................... 12
III. DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS ................................................... 12
A. CMI Classes ................................................................................. 13
B. CMM Classes ................................................................................. 16
C. Holdings Classes ............................................................................ 17
IV. GENERAL PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS ......................................... 17
A. Unclassified Claims ......................................................................... 17
1. Administrative Claims .................................................................. 17
a. General .......................................................................... 17
b. Payment of Statutory Fees ........................................................ 18
2. Priority Tax Claims .................................................................... 18
3. Bar Date for Administrative Claims ..................................................... 18
a. General Provisions ............................................................... 18
b. Professionals .................................................................... 19
c. Ordinary Course Liabilities ...................................................... 19
d. Tax Claims ....................................................................... 19

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B. Identification of Classes of Claims and Interests Impaired and Not
Impaired by the Plan ........................................................................ 20
1. Claims Against and Interests in CMI .................................................... 20
2. Claims Against and Interests in CMM .................................................... 20
3. Claims Against and Interests in Holdings ............................................... 20
C. Treatment of Claims Against and Interests in CMI ............................................ 20
1. Class A1 (Citicorp Secured Claims) ..................................................... 20
2. Class A2 (First Union Secured Claim) ................................................... 20
3. Class A3 (GACC Secured Claim) .......................................................... 21
4. Class A4 (Lehman Secured Claim) ........................................................ 21
5. Class A5 (Merrill Secured Claim) ....................................................... 21
6. Class A6 (Morgan Stanley Secured Claim) ................................................ 21
7. Class A7 (Other Secured Claims) ........................................................ 21
8. Class A8 (Priority Claims) ............................................................. 21
9. Class A9 (Old Senior Note Claims) ...................................................... 21
10. Class A10 (CMI General Unsecured Claims) ............................................... 22
11. Class A11 (Guarantee Claims) ........................................................... 22
12. Class A12 (Freddie Mac Claims) ......................................................... 22
13. Class A13 (Intercompany Claims) ........................................................ 22
14. Class A14 (Series B Preferred Stock) ................................................... 23
15. Class A15 (Series B Preferred Stock Securities Claims) ................................. 23
16. Class A16 (Old Series C Preferred Stock) ............................................... 23
17. Class A17 (Old Series C Preferred Stock Securities Claims) ............................. 23
18. Class A18 (Old Series D Preferred Stock) ............................................... 23
19. Class A19 (Old Series D Preferred Stock Securities Claim) .............................. 24
20. Class A20 (Series F Dividend Preferred Stock) .......................................... 24
21. Class A21 (CMI Common Stock) ........................................................... 24
22. Class A22 (Stock Options) .............................................................. 24
23. Class A23 (CMI Common Stock Securities Claims) ......................................... 24
D. Treatment of Claims Against and Interests in CMM ............................................ 24
1. Class B1 (First Union Secured Claims) .................................................. 24
2. Class B2 (Other Secured Claims) ........................................................ 25
3. Class B3 (Priority Claims) ............................................................. 25
4. Class B4 (Guarantee Claims) ............................................................ 25
5. Class B5 (CMM General Unsecured Claims) ................................................ 25
6. Class B6 (Intercompany Claims) ......................................................... 25
7. Class B7 (CMI's Interests in CMM) ...................................................... 25
E. Treatment of Claims Against and Interests in Holdings ....................................... 26
1. Class C1 (Citicorp Secured Claims) ..................................................... 26
2. Class C2 (Other Secured Claims) ........................................................ 26
3. Class C3 (Priority Claims) ............................................................. 26
4. Class C4 (Guarantee Claims) ............................................................ 26
5. Class C5 (Holdings General Unsecured Claims) ........................................... 26
6. Class C6 (Intercompany Claims) ......................................................... 26
7. Class C7 (Interests in Holdings) ....................................................... 26
F. Modification of Treatment of Claims ......................................................... 27

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V. DISTRIBUTIONS UNDER THE PLAN ..................................................................... 27
A. Disbursing Agent ............................................................................ 27
B. Timing of Distributions ..................................................................... 27
C. Methods of Distributions .................................................................... 27
1. Cash Payments .......................................................................... 27
2. Compliance with Tax Requirements ....................................................... 28
D. Distribution Record Date .................................................................... 28
E. Surrender of Cancelled Old Securities and Exchange of Exchanged ............................. 28
Securities for New Securities ............................................................... 28
1. Tender of Old Securities ............................................................... 28
a. Old Securities Held in Book-Entry Form ............................................. 28
b. Old Securities in Physical, Registered, Certificated Form .......................... 29
2. Delivery of New Securities in Exchange for Old Securities .............................. 29
3. Special Procedures for Lost, Stolen, Mutiliated or Destroyed
Instruments ............................................................................ 30
4. Failure to Surrender Cancelled Instrument .............................................. 30
F. Release of Security Interests in or Other Claims to or against Assets
or Property of the Reorganized Debtors by Creditors Paid Pursuant
to the Plan ................................................................................. 30
G. Delivery of Distributions; Undeliverable or Unclaimed Distributions ......................... 31
H. Procedures for Treating Disputed Claims Under Plan of Reorganization ........................ 32
1. Disputed Claims ........................................................................ 32
a. Process ............................................................................ 32
b. Tort Claims ........................................................................ 32
2. Objections to Claims and Interests ..................................................... 32
3. Professional Claims .................................................................... 33
4. No Distributions Pending Allowance ..................................................... 33
5. Distributions on Account of Disputed Claims and Interests
Once They are Allowed .................................................................. 33
I. Setoffs ..................................................................................... 33
VI. INDIVIDUAL HOLDER PROOFS OF INTEREST ............................................................. 34
VII. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES ............................................ 34
A. Assumptions ................................................................................. 34
B. Cure of Defaults in Connection with Assumption .............................................. 34
C. Rejections .................................................................................. 34
D. Bar Date for Rejection Damages .............................................................. 35
VIII. ACCEPTANCE OR REJECTION OF THE PLAN .............................................................. 35
A. Voting Classes .............................................................................. 35
B. Presumed Acceptances of Plan ................................................................ 35
C. Confirmability of Plan and Cramdown ......................................................... 35
IX. MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN ............................................... 35
A. Corporate Structure ......................................................................... 35
B. Corporate Action ............................................................................ 36
1. Cancellation of Old Securities and Related Agreements .................................. 36
2. Articles of Incorporation and Bylaws for Reorganized CMI ............................... 36
3. Articles of Incorporation and Bylaws for Reorganized CMM ............................... 36

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4. Directors and Management of Reorganized CMI ............................................ 36
5. Directors and Management of Reorganized CMM and
Reorganized Holdings ................................................................... 37
6. No Further Corporate Action ............................................................ 37
C. Implementation .............................................................................. 37
D. Effectuating Documents and Actions .......................................................... 38
E. Term of Injunctions or Stays ................................................................ 38
F. No Interest; Disallowance of Penalties and Premiums ......................................... 38
G. Retiree Benefits ............................................................................ 38
H. Recapitalization Financing Including Issuance of New Securities ............................. 38
I. Sale of the CMBS Sale Portfolio ............................................................. 39
J. Potential New Equity Investment and Rights Offering ......................................... 39
K. Second Amended and Restated Stock Option Plan ............................................... 40
X. CONFIRMATION AND EFFECTIVE DATE CONDITIONS ....................................................... 40
A. Conditions to Confirmation .................................................................. 40
B. Conditions to Effective Date ................................................................ 41
XI. EFFECTS OF PLAN CONFIRMATION ..................................................................... 41
A. Discharge of Debtors and Injunction ......................................................... 41
B. Limitation of Liability ..................................................................... 42
C. Releases .................................................................................... 42
D. Indemnification ............................................................................. 43
E. Vesting of Assets ........................................................................... 44
F. Preservation of Causes of Action ............................................................ 44
G. Retention of Bankruptcy Court Jurisdiction .................................................. 44
H. Failure of Bankruptcy Court to Exercise Jurisdiction ........................................ 46
I. Committees .................................................................................. 46
XII. MISCELLANEOUS PROVISIONS ......................................................................... 47
A. Final Order ................................................................................. 47
B. Modification of the Plan .................................................................... 47
C. Revocation of the Plan ...................................................................... 47
D. Application of Section 1145 of the Bankruptcy Code and Federal
Securities Laws ............................................................................. 48
E. Application of Section 1146(c) of the Bankruptcy Code ....................................... 48
F. Successors and Assigns ...................................................................... 48
G. Saturday, Sunday or Legal Holiday ........................................................... 48
H. Committee Action ............................................................................ 48
I. Post-Effective Date Effect of Evidences of Claims or Interests .............................. 48
J. Governing Law ............................................................................... 49
K. No Liability for Solicitation or Participation .............................................. 49
L. No Admissions or Waiver of Objections ....................................................... 49
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I. INTRODUCTION

CRIIMI MAE Inc. (defined herein as "CMI") and its affiliates CRIIMI MAE
Holdings II L.P. (defined herein as "Holdings") and CRIIMI MAE Management, Inc.
(defined herein as "CMM", collectively with CMI and Holdings, as "Debtors")
hereby propose the following Amended Joint Plan of Reorganization (defined
herein as the "Plan") for the resolution of the Debtors' outstanding creditor
claims and equity interests and request confirmation of the Plan pursuant to
Section 1129 of the Bankruptcy Code. The Official Committee of Equity Security
Holders of CMI (defined herein as the "CMI Equity Committee" joins the Debtors
as a Co-Proponent of this Plan.

All Holders of Claims and Interests are encouraged to read the Plan and
the accompanying Disclosure Statement.

No materials, other than the accompanying Disclosure Statement and any
exhibits and schedules attached thereto or referenced therein, have been
approved by the Debtors for use in soliciting acceptances or rejections of the
Plan.

II. DEFINITIONS, INTERPRETATION AND RULES OF CONSTRUCTION

A. DEFINITIONS.

In addition to such other terms as are defined in other sections of the
Plan, the following terms (which appear in the Plan as capitalized terms) have
the following meanings as used in the Plan:

1. "ADMINISTRATIVE CLAIM" means a Claim for payment of an
administrative expense of a kind specified in Section 503(b) of the Bankruptcy
Code and referred to in Section 507 (a) (1) of the Bankruptcy Code, including,
without limitation, the actual and necessary costs and expenses incurred after
the commencement of the Chapter 11 Cases of preserving the estate or operating
the business of any of the Debtors (including wages, salaries and commissions
for services), loans and advances to any of the Debtors made after the Petition
Date, compensation for legal and other services and reimbursement of expenses
awarded or allowed under Section 330(a) or 331 of the Bankruptcy Code, and all
fees and charges against the estate under Section 1930 of title 28, United
States Code.

2. "ALLOWED CLAIM" or "ALLOWED INTEREST" means a Claim against or
Interest in the Debtors:

(1) to the extent that a proof of such Claim or Interest was
timely Filed and served upon the Debtors and no objection to the Claim
or Interest, or motion to estimate the Claim or Interest for purposes
of allowance (as used hereinafter, the word "objection" shall include a
motion to estimate for purposes of allowance), is Filed within the time
fixed by the Bankruptcy Court for such objections; or

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(2) to the extent that a proof of such Claim or Interest is
deemed Filed under applicable law or pursuant to a Final Order of the
Bankruptcy Court (including, but not limited to, any Claim or Interest
listed on the Debtors' schedules, not scheduled as contingent,
unliquidated or disputed, and not superseded by a timely-filed proof of
Claim or Interest) and no objection to the Claim or Interest is Filed
within the time fixed by the Bankruptcy Court for such objections; or

(3) that is allowed pursuant to this Plan; or

(4) to the extent that a proof of such Claim or Interest is
allowed pursuant to the following sentence of this definition.

If an objection to a proof of Claim or Interest is filed within the
time fixed by the Bankruptcy Court, the Claim or Interest shall be Allowed to
the extent of:

(1) any amount of such Claim or Interest to which no objection
was Filed; and

(2) any amount otherwise authorized by Final Order or the
Plan.

"ALLOWED ADMINISTRATIVE CLAIM," "ALLOWED PRIORITY TAX CLAIM," "ALLOWED SECURED
CLAIM" and "ALLOWED UNSECURED CLAIM" have correlative meanings.

3. "ALLOWED CLASS ... CLAIM" means an Allowed Claim in the particular
Class described.

4. "ALLOWED CLASS ... INTEREST" means an Allowed Interest in the
particular Class described.

5. "BANKRUPTCY CODE" means title 11 of the United States Code, as now
in effect or hereafter amended if such amendments are made applicable to the
Reorganization Cases.

6. "BANKRUPTCY COURT" means the United States Bankruptcy Court for the
District of Maryland, at Greenbelt, or such other court or adjunct thereof that
exercises jurisdiction over the Reorganization Cases.

7. "BANKRUPTCY RULES" means the Federal Rules of Bankruptcy Procedure,
as applicable from time to time in the Reorganization Cases.

8. "BUSINESS DAY" means any day other than a Saturday, a Sunday or a
"legal holiday" (as defined in Bankruptcy Rule 9006(a)).

9. "CASH" means lawful currency of the United States, a certified
check, a cashier's check or a wire transfer of immediately available funds from
any source, or a check drawn on a domestic bank from Reorganized CMI,
Reorganized CMM, Reorganized Holdings or other Person making any distribution
under the Plan.

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10. "CLAIM" means a claim against any of the Debtors, whether or not
asserted or allowed, as defined in Section 101(5) of the Bankruptcy Code,
including, without limitation, Administrative Claims.

11. "CLASS" means a class of Claims or Interests designated pursuant to
the Plan.

12. "CLASS A9 NOTE" means one of a series of 7-year notes to be issued
on the Effective Date by CMI pursuant to an Indenture to Holders of Allowed
Class A9 Claims on the Distribution Record Date, with interest on the unpaid
principal balance at the rate of 11.5% per annum, payable semiannually, which
notes shall mature on the seventh anniversary of the Effective Date and which
Indenture shall include reasonable and customary covenants.

13. "CLASS A10 CASH PAYMENT" means the Cash payment to be made on the
Effective Date by CMI to Holders of Allowed Class A10 Claims.

14. "CLASS A10 NOTE" means one in a series of 6-year notes to be issued
on the Effective Date by CMI pursuant to an Indenture to Holders of Allowed
Class A10 Claims on the Distribution Record Date, with interest on the unpaid
principal balance at the rate of 11.25% per annum, payable semiannually, which
notes shall mature on the sixth anniversary of the Effective Date and which
Indenture shall include reasonable and customary covenants.

15. "CLEARING SYSTEMS" means DTC or any similar clearing system.

16. "CLERK" means the Clerk of the Bankruptcy Court.

17. "CMBS SALE PORTFOLIO" means those commercial mortgage-backed
securities and any other assets identified on a schedule to be provided to the
Bankruptcy Court at or before the Confirmation Hearing setting forth those
commercial mortgage-backed securities and other assets to be sold as part of
funding this Plan.

18. "CMI" means CRIIMI MAE Inc., a Maryland corporation.

19. "CMI COMMON STOCK" means the common stock of CMI, par value $.01
per share.

20. "CMI EQUITY COMMITTEE" means the Official Committee of Equity
Security Holders of CMI appointed by the United States Trustee.

21. "CMI GENERAL UNSECURED CLAIMS" means all Allowed Unsecured Claims
against CMI other than Claims against CMI of Holders of Old Senior Notes,
Unsecured Claims (if any) in Classes A8, A9, A11, A12, A13, A15, A17, A19 and
A23 as provided hereinafter, Administrative Claims against CMI and Priority Tax
Claims against CMI.

22. "CMM" means CRIIMI MAE Management, Inc., a Maryland corporation and
wholly-owned subsidiary of CMI.

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23. "CMM GENERAL UNSECURED CLAIMS" means all Allowed Unsecured Claims
against CMM other than Unsecured Claims (if any) in Classes B3, B4 and B6 as
provided hereinafter, Administrative Claims against CMM and Priority Tax Claims
against CMM.

24. "CMO-IV BONDS" means the following bonds owned by CMI: CMM 1998-1,
Class X/IO; CMM 1998-1, Class F; CMM 1998-1, Class G; CMM 1998-1, Class H; and
CMM 1998-1, Class J.

25. "CMSLP" means CRIIMI MAE Services Limited Partnership, a Maryland
limited partnership.

26. "COMMITTEES" means any statutory committees of creditors or equity
interest holders of the Debtors appointed by the United States Trustee pursuant
to Section 1102 of the Bankruptcy Code.

27. "CONFIRMATION" means the entry by the Bankruptcy Court of the
Confirmation Order.

28. "CONFIRMATION DATE" means the date on which the Clerk enters the
Confirmation Order on the Docket.

29. "CONFIRMATION HEARING" means the hearing on confirmation of the
Plan.

30. "CONFIRMATION ORDER" means the Order of the Bankruptcy Court
confirming the Plan under Section 1129 of the Bankruptcy Code.

31. "CO-PROPONENT" means the CMI Equity Committee as a Co-Proponent of
this Plan with the Debtors.

32. "DEBTOR RELEASEES" shall have the meaning ascribed to such term in
Section XI.C of the Plan.

33. "DEBTORS" means CMI, Holdings and CMM, collectively and
individually as appropriate from the context, as debtors and debtors in
possession.

34. "DEBTORS IN POSSESSION" means the Debtors, when acting in the
capacity of representatives of the Estates in the Reorganization Cases.

35. "DISBURSING AGENT" means, collectively, one or more Persons
responsible for making distributions under the Plan. The Reorganized Debtors or
such Person(s) as the Debtors may employ in their sole discretion will serve as
Disbursing Agent.

36. "DISCLOSURE STATEMENT" means the disclosure statement pursuant to
Section 1125 or Section 1126(b) of the Bankruptcy Code with respect to the Plan
(and all exhibits and schedules annexed thereto or referred to therein), as it
may be amended or supplemented from time to time.

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37. "DISPUTED CLAIM" means a Claim, to the extent such Claim is not an
Allowed Claim or disallowed by a Final Order.

38. "DISPUTED INTEREST" means an Interest to the extent such Interest
is not an Allowed Interest.

39. "DISTRIBUTION RECORD DATE" means the date fixed by the Bankruptcy
Court as the record date for determining the Holders of Allowed Claims or
Allowed Interests who are entitled to receive distributions under this Plan,
which date shall not be prior to five Business Days after the Confirmation Date
and, if no such date is fixed, means five Business Days after the Confirmation
Date.

40. "DOCKET" means the docket or dockets in the Reorganization Cases
maintained by the Clerk.

41. "DTC" means The Depository Trust Company.

42. "EFFECTIVE DATE" means the first Business Day that is not less than
eleven (11) days after the Confirmation Date on which, as determined by the
Debtors, (i) all conditions to the Effective Date set forth herein have been
satisfied or waived by the Debtors, and (ii) no stay of the Confirmation Order
is in effect.

43. "ELIGIBLE INSTITUTION" shall have the meaning ascribed to such term
in Section V.E.l.b of the Plan.

44. "EMPLOYEE CLAIMS" means Claims which are asserted by employees of
the Debtors in connection with their employment, including, without limitation,
Claims arising from or relating to salaries or wages, accrued paid vacation,
health-related benefits, severance benefits, field management and
executive/administrative management incentive plans and similar employee
benefits.

45. "EQUITY COMMITTEE" means the Official Committee of Equity Security
Holders of CMI appointed by the United States Trustee.

46. "ESTATES" means the estates created in the Debtors' Reorganization
Cases under Section 541 of the Bankruptcy Code.

47. "FILE," "FILED" or "FILING" means file, filed or filing with the
Bankruptcy Court in the Reorganization Cases.

48. "FINAL ORDER" means an order or judgment of the Bankruptcy Court,
as entered on the Docket in the Reorganization Cases, which has not been
reversed, stayed, modified or amended, and as to which (a) the time to appeal,
seek certiorari or request reargument or further review or rehearing has expired
and no appeal, petition for certiorari or request for reargument or further
review or rehearing has been timely filed, or (b) any appeal that has been or
may be taken or any petition for certiorari or request for reargument or further
review or rehearing that has been or may be filed has been resolved by the
highest court to which the order or judgment was

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appealed, from which certiorari was sought or to which the request was made and
no further appeal or petition for certiorari has been or can be taken or
granted.

49. "FREDDIE MAC" means the Federal Home Loan Mortgage Corporation.

50. "FREDDIE MAC AGREEMENT" means that certain Funding Note Purchase
and Security Agreement dated as of September 22, 1995, among Freddie Mac, CMI
and CRIIMI MAE Financial Corporation II.

51. "GACC" means German American Capital Corporation.

52. "GUARANTEE CLAIMS" means any Claim against any of the Debtors
arising from or under any agreement of the Debtors guaranteeing the obligations
of another Debtor.

53. "HOLDER" means a Person who holds a Claim or Interest in such
Person's capacity as the holder of such Claim or Interest. Where the identity of
the Holder of a Claim or Interest is set forth on a register or other record
maintained by or at the direction of the Debtors, the Holder of such Claim or
Interest shall be deemed to be the Holder as identified on such register or
record unless the Debtors are otherwise notified in a writing authorized by such
Holder.

54. "HOLDINGS" means CRIIMI MAE Holdings II, L.P., a Delaware limited
partnership.

55. "HOLDINGS GENERAL UNSECURED CLAIMS" means all Allowed Unsecured
Claims against Holdings other than Unsecured Claims (if any) in Classes C3, C4
and C6 as provided hereinafter, Administrative Claims against Holdings and
Priority Tax Claims against Holdings.

56. "IMPAIRED" shall have the meaning ascribed to it in Section 1124 of
the Bankruptcy Code.

57. "INDEMNITEES" shall have the meaning ascribed to such term in
Section XI.D of the Plan.

58. "INDENTURE TRUSTEE" means State Street Bank, as indenture trustee
for the Old Senior Notes or any successor thereto.

59. "INSTRUMENT" means any share of stock, security, promissory note or
other "INSTRUMENT," within the meaning of that term, as defined in Section 9-105
(1) (i) of the UCC.

60. "INSURANCE PROCEEDS" means the insurance proceeds payable to or on
behalf of CMI with respect to an Allowed Securities Claim.

61. "INTERCOMPANY CLAIMS" means any and all Claims and causes of action
which any of the Debtors holds against any other Debtor.

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62. "INTEREST" means the interest of any equity security Holder of the
Debtors, whether or not asserted, as defined in Section 101 (17) of the
Bankruptcy Code.

63. "LETTER OF TRANSMITTAL" shall have the meaning ascribed to such
term in Section V.E.l.b of the Plan.

64. "LIBOR" means the London Interbank Offered Rate for one-month
United States dollars deposits as set forth on page 3750 of Telerate as of 8:00
a.m., New York City time, on the date of determination.

65. "LOCAL BANKRUPTCY RULES" means the local rules of the Bankruptcy
Court, as applicable from time to time in the Reorganization Cases.

66. "MERRILL" means Merrill Lynch Mortgage Capital Inc.

67. "NEW DEBT" means the new secured and unsecured debt to be borrowed
by, or issued pursuant to the Plan to creditors of, the Reorganized Debtors as
part of funding the Plan and the Reorganized Debtors.

68. "NEW EQUITY" means the new equity capital (if applicable) raised by
Reorganized CMI in accordance with Section IX.J of this Plan.

69. "NEW SECURITIES" means the Class A9 Notes, the Class A10 Notes, the
New Series C Preferred Stock and the New Series D Preferred Stock.

70. "NEW SERIES C PREFERRED STOCK" means the New Series C Preferred
Stock to be issued effective as of the Effective Date to Holders of Old Series C
Preferred Stock as of the Distribution Record Date.

71. "NEW SERIES D PREFERRED STOCK" means the New Series D Preferred
Stock to be issued effective as of the Effective Date to Holders of Old Series D
Preferred Stock as of the Distribution Record Date.

72. "OLD CMI PREFERRED STOCK" means the Old Series C Preferred Stock
and Old Series D Preferred Stock.

73. "OLD SECURITIES" means the Old Senior Notes and the Old CMI
Preferred Stock.

74. "OLD SENIOR NOTE CLAIMS" means Claims arising from the Old Senior
Notes (including all Claims and causes of action arising therefrom or in
connection therewith).

75. "OLD SENIOR NOTES" means CMI's 91/8% Senior Notes due 2002 in the
aggregate, original, principal amount of $100 million.

76. "OLD SERIES C PREFERRED STOCK" means CMI's Series C Cumulative
Convertible Preferred Stock, with a liquidation preference of $100 per share.

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77. "OLD SERIES D PREFERRED STOCK" means CMI's Series D Cumulative
Convertible Preferred Stock, with a liquidation preference of $100 per share.

78. "ORDER" means an order or judgment of the Bankruptcy Court as
entered on the Docket.

79. "OTHER SECURED CLAIM" means any Allowed Secured Claim in Class A7,
Class B2 or Class C2.

80. "PERSON" means any individual, corporation, general partnership,
limited partnership, limited liability partnership, limited liability company,
association, joint stock company, joint venture, government or political
subdivision, official committee appointed by the United States Trustee,
unofficial committee of creditors or equity holders, or other "entity" (as
defined in the Bankruptcy Code).

81. "PETITION DATE" means October 5, 1998, the date on which the
Reorganization Cases were Filed.

82. "PLAN" means this plan of reorganization for the Debtors in the
Reorganization Cases and all exhibits and schedules hereto, as such may be
amended, modified or supplemented from time to time.

83. "PLAN INTEREST" means interest at the legal rate, which shall mean
the federal judgment rate pursuant to 28 U.S.C. ss.1961(a) in effect as of the
Confirmation Date unless the Holder of a Claim objects thereto on or before the
Confirmation Date, in which event the applicable rate for such objector will be
the federal rate as determined by the Bankruptcy Court for such objector if such
objector is determined to be the Holder of an Allowed Claim.

84. "PLAN RATE" means interest at the non-default contract interest
rate provided for in the documents applicable to the Claim of the creditor for
whom the term Plan Rate is applicable. If a creditor has more than one Allowed
Claim with different documents providing for different non-default contract
interest rates for each such Allowed Claim, then the Plan Rate shall be
calculated at the non-default contract interest rate applicable to each separate
component of such creditor's Allowed Claim.

85. "POST-PETITION TAX CLAIMS" means Administrative Claims and other
Claims by a governmental unit for taxes (and for interest and/or penalties
related to such taxes) for any tax year or period, to the extent such Claim
accrues within the period from and including the Petition Date through and
including the Effective Date.

86. "PRIORITY CLAIM" means an Allowed Claim entitled to priority under
any of Sections 507 (a) (3) through 507 (a) (7) or 507 (a) (9) of the Bankruptcy
Code, but excludes Priority Tax Claims.

87. "PRIORITY TAX CLAIM" means an Allowed Claim entitled to priority
under Section 507 (a) (8) of the Bankruptcy Code.

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88. "PRO RATA" means proportionately so that, with respect to any Class
or Classes, the ratio of (a) the amount of consideration distributed on account
of a particular Allowed Claim to (b) the amount of such particular Allowed
Claim, is the same as the ratio of (x) the amount of consideration distributed
on account of all Allowed Claims of the Class or Classes in which the particular
Allowed Claim is included to (y) the aggregate amount of all Allowed Claims of
that Class or Classes. Until a Disputed Claim is disallowed by a Final Order or
otherwise resolved, it will be treated in all Pro Rata calculations at the
lesser of the amount requested by the claimant and such amount as may be capped
by the Bankruptcy Court upon motion requesting such a cap.

89. "RECAPITALIZATION FINANCING" means the total New Debt and New
Equity (if applicable) to be used in connection with funding the Plan and the
Reorganized Debtors.

90. "REORGANIZATION CASES" means the Debtors' cases under chapter 11 of
the Bankruptcy Code.

91. "REORGANIZED CMI" means CMI, as it will be reorganized as of the
Effective Date in accordance with this Plan.

92. "REORGANIZED CMI ARTICLES OF INCORPORATION" means the amended and
restated articles of incorporation of Reorganized CMI that will be effective on
the Effective Date.

93. "REORGANIZED CMI BYLAWS" means the amended and restated bylaws of
Reorganized CMI that will be effective on the Effective Date.

94. "REORGANIZED CMM" means CMM as it will be reorganized as of the
Effective Date in accordance with this Plan.

95. "REORGANIZED CMM ARTICLES OF INCORPORATION" means the amended and
restated articles of incorporation of Reorganized CMM that will be effective on
the Effective Date if the CMM articles of incorporation are amended; otherwise,
it means the CMM articles of incorporation in existence as of the Effective
Date.

96. "REORGANIZED CMM BYLAWS" means the amended and restated bylaws of
Reorganized CMM that will be effective on the Effective Date if the CMM bylaws
are restated; otherwise, it means the CMM bylaws in existence as of the
Effective Date.

97. "REORGANIZED DEBTORS" means Reorganized CMI, Reorganized CMM and
Reorganized Holdings, collectively and individually, as appropriate from the
context.

98. "REORGANIZED HOLDINGS" means Holdings as it will be reorganized as
of the Effective Date in accordance with this Plan.

99. "SECOND AMENDED AND RESTATED STOCK OPTION PLAN" means the Second
Amended and Restated Stock Option Plan for Key Employees to be effective on the
Effective Date.

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<PAGE>

100. "SECURED CLAIM" means any Claim that is secured by a lien on
property in which the Estates have an interest or that is subject to setoff
under Section 553 of the Bankruptcy Code, to the extent of the value of the
Claim Holder's interest in the Estates' interest in such property or to the
extent of the amount subject to setoff, as applicable, as determined pursuant to
Section 506 (a) or Section 1111 (b) of the Bankruptcy Code and any repurchase
agreement Claim based upon the repurchase price thereunder but only to the
extent of the value of the Claim Holder's interest in the property that is the
subject of the repurchase agreement.

101. "SECURITIES CLAIM" means (a) any Claim arising from a claim for
rescission of a purchase or sale of any Old Securities or for damages arising
from the purchase or sale of any Old Securities or (b) any Claim for indemnity,
reimbursement or contribution on account of any such Claim.

102. "SERIES B PREFERRED STOCK" means CMI's Series B Cumulative
Convertible Preferred Stock, with a liquidation preference of $25.00 per share.

103. "SERIES F DIVIDEND PREFERRED STOCK" means CMI's Series F
Redeemable Cumulative Dividend Preferred Stock (convertible during the period of
ten (10) business days after the fifth business day after the initial issue date
and during the period of ten (10) business days ending ninety (90) calendar days
after the initial issue date or the first business day thereafter).

104. "STOCK OPTIONS" means the stock options to acquire CMI Common
Stock outstanding as of the Effective Date.

105. "TENDERED CERTIFICATES" shall have the meaning ascribed to such
term in Section V.E.l.b of the Plan.

106. "TORT CLAIM" means any Claim related to personal injury, property
damage or loss, products liability or other similar Claims against any Debtor,
and shall not include Securities Claims or Claims arising under, based upon or
related to Stock Options.

107. "UCC" means the Maryland Uniform Commercial Code, as in effect at
any relevant time.

108. "UNIMPAIRED" means with respect to any Claim or Interest that such
Claim or Interest is not Impaired.

109. "UNSECURED CLAIM" means any Claim that is not a Secured Claim.

110. "VOTING RECORD DATE" means the date set by the Bankruptcy Court
for determining the Holders of Old Senior Notes, Series B Preferred Stock, Old
CMI Preferred Stock and CMI Common Stock entitled to vote to accept or reject
the Plan.

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<PAGE>

INTERPRETATION AND COMPUTATION OF TIME.

1. Defined Terms.

Any term used in the Plan that is not defined in the Plan, in Article
II (Definitions) or elsewhere, but that is defined in the Bankruptcy Code, the
Bankruptcy Rules or the Local Bankruptcy Rules, shall have the meaning ascribed
to that term in the Bankruptcy Code, the Bankruptcy Rules or the Local
Bankruptcy Rules, as the case may be.

2. Rules of Interpretation.

For purposes of the Plan: (a) whenever it appears appropriate from the
context, each term, whether stated in the singular or the plural, shall include
both the singular and the plural; (b) any reference in the Plan to a contract,
instrument, release or other agreement or document being in a particular form or
on particular terms and conditions means that such document shall be
substantially in such form or substantially on such terms and conditions;
provided, however, that any change to such form, terms, or conditions which is
material to a party to such document shall not be made without such party's
consent; (c) any reference in the Plan to an existing document or exhibit Filed
or to be Filed means such document or exhibit, as it may have been or may be
amended, modified or supplemented from time to time; (d) unless otherwise
specified in a particular reference, all references in the Plan to paragraphs,
sections, articles and exhibits are references to paragraphs, sections, articles
and exhibits of or to the Plan; (e) the words "herein," "hereof," "hereto,"
"hereunder" and others of similar import refer to the Plan in its entirety
rather than to a particular portion of the Plan only; (f) captions and headings
to articles and paragraphs are inserted for convenience of reference only and
are not intended to be a part of or to affect the interpretations of the Plan;
and (g) the rules of construction set forth in Section 102 of the Bankruptcy
Code shall apply.

3. Time Periods.

In computing any period of time prescribed or allowed by the Plan, the
provisions of Bankruptcy Rule 9006(a) shall apply.

III. DESIGNATION OF CLASSES OF CLAIMS AND INTERESTS

The following is a designation of the Classes of Claims and Interests
under the Plan. In accordance with Section 1123(a)(1) of the Bankruptcy Code,
Administrative Claims and Priority Tax Claims have not been classified and are
excluded from the following Classes. A Claim or Interest is classified in a
particular Class only to the extent that the Claim or Interest qualifies within
the description of that Class, and is classified in another Class or Classes to
the extent that any remainder of the Claim or Interest qualifies within the
description of such other Class or Classes. A Claim or Interest is classified in
a particular Class only to the extent that the Claim or Interest is an Allowed
Claim or Allowed Interest in that Class and has not been paid, released or
otherwise satisfied before the Effective Date; a Claim or Interest which is not
an Allowed Claim or Allowed Interest is not in any Class. A Disputed Claim or
Disputed Interest, to the extent that it subsequently becomes an Allowed Claim
or Allowed Interest, shall be included in the Class for

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<PAGE>

which it would have qualified had it not been disputed. Notwithstanding anything
to the contrary contained in the Plan, no distribution shall be made on account
of any Claim or Interest to the extent such Claim or Interest is not an Allowed
Claim or an Allowed Interest. In addition, for purposes of the classification
and treatment of Secured Claims under this Plan, any transfers of Claims
occurring after the Petition Date shall not impact the classification or
treatment of Secured Claims as provided in the Plan or the status of an
Unsecured Claim as of the Petition Date to continue to be treated under this
Plan as an Unsecured Claim.

A. CMI CLASSES

Class A1 - Citicorp Secured Claims Class A1 consists of all Allowed Secured Claims against CMI
of Citicorp Securities, Inc., Salomon Smith Barney Inc.,
Citicorp Real Estate, Inc. and/or CitiBank N.A. or any
other Holder of a Secured Claim against CMI under, arising
from or related to that certain Master Repurchase Agreement
between CMI and Citicorp Securities, Inc. dated as of
August 1, 1997 or any documents executed in connection
therewith or related thereto.

Class A2 - First Union Secured Claim Class A2 consists of all Allowed Secured Claims against CMI
of First Union National Bank or any other Holder of a
Secured Claim against CMI under, arising from or related to
(i) that certain Master Assignment Agreement between First
Union National Bank and CMI dated as of June 30, 1998 or
any documents executed in connection therewith or related
thereto or (ii) that certain Guaranty by CMI in favor of
and for the benefit of Signet Bank/Virginia entered into as
of June 30, 1995 or that certain Collateral Assignment of
Partnership Interests from CMI in favor of Signet
Bank/Virginia dated as of June 30, 1995 or that certain
Stock Pledge Agreement by CMI in favor of Signet
Bank/Virginia dated as of June 30, 1995 or that certain
Credit Agreement between CMM and Signet Bank/Virginia dated
as of June 30, 1995 or any documents executed in connection
with or related to any of the foregoing.

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<PAGE>

CMI and German American Capital Corp. dated as of March 31,
1998 or any documents executed in connection therewith or
related thereto.

Class A4 - Lehman Secured Claim Class A4 consists of all Allowed Secured Claims against CMI
of Lehman Ali Inc. or any other Holder of a Secured Claim
against CMI under, arising from or related to that certain
Master Assignment Agreement between CMI and Lehman Ali Inc.
dated as of May 29, 1998 or any documents executed in
connection therewith or related thereto.

Class A5 - Merrill Secured Claim Class A5 consists of all Allowed Secured Claims against CMI
of Merrill Lynch Mortgage Capital Inc. or any other Holder
of a Secured Claim against CMI under, arising from or
related to that certain Master Assignment Agreement between
CMI and Merrill Lynch Mortgage Capital Inc. dated as of
September 25, 1997 or any documents executed in connection
therewith or related thereto.

Class A6 - Morgan Stanley Secured Claim Class A6 consists of any Allowed Secured Claims against CMI
of Morgan Stanley & Co. International Ltd. or any other
Holder of a Secured Claim against CMI under, arising from
or related to that certain Master Repurchase Agreement
between Morgan Stanley & Co. International Limited and CMI
dated as of May 8, 1998 or any documents executed in
connection therewith or related thereto.

Class A7 - Other Secured Claims Class A7 consists of any Allowed Secured Claims against CMI
other than the Secured Claims specified in Classes A1
through A6.

Class A8 - Priority Claims Class A8 consists of all Allowed Priority Claims against
CMI.

Class A9 - Old Senior Note Claims Class A9 consists of all Allowed Claims against CMI of
Holders of Old Senior Notes.

Class A10 - CMI General Unsecured Claims Class A10 consists of all Allowed Unsecured Claims against
CMI other than the Unsecured Claims (if any) in Classes A8,
A9, A11, A12,

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<PAGE>

A13, A15, A17, A19 and A23 and other than Administrative
Claims and Priority Tax Claims.

Class A11 - Guarantee Claims Class A11 consists of all Allowed Claims against CMI of
Holders of Guarantee Claims based upon CMI's guarantee of
obligations of CMM or Holdings, as the case may be.

Class A12 - Freddie Mac Claims Class A12 consists of Claims against CMI of Freddie Mac
numbered 335 and 497, on the July 20, 1999 claims register,
in the amount of $230,448,487.24 each.

Class A13 - Intercompany Claims Class A13 consists of all Allowed Claims against CMI of CMM
or Holdings.

Class A14 - Series B Preferred Stock Class A14 consists of all Allowed Series B Preferred Stock
Interests in CMI.

Class A15 - Series B Preferred Stock Class A15 consists of all Allowed Securities Claims on account
Securities Claims of Series B Preferred Stock against CMI.

Class A16 - Old Series C Preferred Stock Class A16 consists of all Allowed Old Series C Preferred
Stock Interests in CMI.

Class A17 - Old Series C Preferred Stock Claims Class A17 consists of all Allowed Securities Claims on
Securities account of Old Series C Preferred Stock against CMI.

Class A18 - Old Series D Preferred Stock Class A18 consists of all Allowed Old Series D Preferred
Stock Interests in CMI.

Class A19 - Old Series D Preferred Stock Class A19 consists of all Allowed Securities Claims on Securities
Claim account of Old Series D Preferred Stock against CMI.

Class A20 - Series F Dividend Preferred lass A20 consists of all Allowed Series F Dividend
Stock referred Stock Interests in CMI.

Class A21 - CMI Common Stock lass A21 consists of all Allowed CMI Common Stock
nterests in CMI.

Class A22 - Stock Options lass A22 consists of all Allowed Stock Option Interests in
CMI.

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<PAGE>

Class A23 - CMI Common Stock Securities Class A23 consists of all Allowed Securities
Claims Claims on account of CMI Common Stock against CMI.

B. CMM CLASSES

Class B1 - First Union Secured Claims Class B1 consists of all Allowed Secured Claims
against CMM of First Union National Bank or any
other Holder of a Secured Claim against CMM under,
arising from or related to that certain Credit
Agreement between CMM and Signet Bank/Virginia
dated as of June 30, 1995 or any documents executed
in connection therewith or related thereto.

Class B2 - Other Secured Claims Class B2 consists of any Allowed Secured Claims
against CMM other than the Secured Claims specified
in Class B1.

Class B3 - Priority Claims Class B3 consists of all Allowed Priority Claims
against CMM.
Class B4 - Guarantee Claims Class B4 consists of all Allowed Claims against CMM
of Holders of Guarantee Claims based upon CMM's
guarantee of obligations of CMI or Holdings, as
the case may be.
Class B5 - CMM General Unsecured Claims Class B5 consists of all Allowed Unsecured Claims
against CMM other than the Unsecured Claims (if
any) in Classes B3, B4 and B6 and other than
Administrative Claims and Priority Tax Claims.

Class B6 - Intercompany Claims Class B6 consists of all Allowed Claims against CMM
of CMI or Holdings.

Class B7 - CMI's Interests in CMM Class B7 consists of all Allowed Interests in CMM
of CMI.

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<PAGE>

C. HOLDINGS CLASSES

Class C1 - Citicorp Secured Claims Class C1 consists of all remaining Allowed Secured
Claims (if any) against Holdings of Citicorp
Securities, Inc. and/or Salomon Smith Barney Inc.

Class C2 - Other Secured Claims Class C2 consists of any Allowed Secured Claims
against Holdings other than the Secured Claims
specified in Class C1.

Class C3 - Priority Claims Class C3 consists of all Allowed Priority Claims
against Holdings.

Class C4 - Guarantee Claims Class C4 consists of all Allowed Claims against
Holdings of Holders of Guarantee Claims based upon
Holdings' guarantee of obligations of CMI or CMM, as
the case may be.

Class C5 - Holdings General Unsecured Class C5 consists of all Allowed Unsecured Claims
Claims against Holdings other than the Unsecured Claims (if
any) in Classes C3, C4 and C6 and other than
Administrative Claims and Priority Tax Claims.

Class C6 - Intercompany Claims Class C6 consists of all Allowed Claims against
Holdings of CMI or CMM.

Class C7 - Interests in Holdings Class C7 consists of all Allowed Interests in
Holdings of CMI and CMSLP.
</TABLE>

IV. GENERAL PROVISIONS FOR TREATMENT OF CLAIMS AND INTERESTS

A. Unclassified Claims.

1. Administrative Claims.

a. General.

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an Allowed Claim, unless the Holder and Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, shall have agreed to other treatment
of such Claim, or an order of the Bankruptcy Court provides for other terms, in
which case such Allowed Administrative Claim shall be paid in accordance with
such agreement or Bankruptcy Court order, as applicable; provided, that if
incurred in the ordinary course of business or otherwise assumed by the Debtors
pursuant to the Plan (including Administrative Claims of governmental units for
taxes), an Allowed Administrative Claim will be assumed on the Effective Date
and paid, performed or settled by Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, when due in accordance with the terms
and conditions of the particular agreement(s) governing the obligation in the
absence of the Reorganization Cases.

b. Payment of Statutory Fees.

All fees payable pursuant to 28 U.S.C. ss. 1930(a)(6) (U.S. Trustee
Fees) shall be paid by the Debtors or the Reorganized Debtors, as applicable,
when such fees are due and owing.

2. Priority Tax Claims.

Unless otherwise agreed to by the Debtors or Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as the case may be, and a Holder of a
Priority Tax Claim, each Holder of an Allowed Priority Tax Claim shall receive,
at the sole option of Reorganized CMI, Reorganized CMM or Reorganized Holdings,
as the case may be, (i) Cash equal to the unpaid portion of such Allowed
Priority Tax Claim on the later of the Effective Date and the date on which such
Claim becomes an Allowed Priority Tax Claim, or as soon thereafter as is
practicable, or (ii) equal quarterly Cash payments in an aggregate amount equal
to such Allowed Priority Tax Claim, together with interest at a fixed annual
rate to be determined by the Bankruptcy Court or otherwise agreed to by
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be,
and such Holder, over a period through the sixth anniversary of the date of
assessment of such Allowed Priority Tax Claim, or upon such other terms
determined by the Bankruptcy Court to provide the Holder of such Allowed
Priority Tax Claim deferred Cash payments having a value, as of the Effective
Date, equal to such Allowed Priority Tax Claim. The Holders of Allowed Priority
Tax Claims are not entitled to vote on the Plan. Pursuant to Section 1123(a)(1)
of the Bankruptcy Code, Priority Tax Claims are not designated a Class of Claims
for purposes of voting on the Plan.

3. Bar Date for Administrative Claims.

a. General Provisions.

Except as provided below for (i) non-tax liabilities incurred in the
ordinary course of business by the Debtors in Possession and (ii) Post-Petition
Tax Claims, requests for payment of Administrative Claims must be Filed and
served on counsel for the Debtors and Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, no later than (x) sixty (60) days
after the Effective Date, or (y) such later date, if any, as the Bankruptcy
Court shall order upon application made prior to the end of such 60-day period.
Holders of Administrative Claims (including, without limitation, professionals
requesting compensation or reimbursement of expenses and the Holders of any
Claims for federal, state or local taxes) that are required to

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File a request for payment of such Claims and that do not File such requests by
the applicable bar date shall be forever barred from asserting such Claims
against the Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings,
or any of their respective properties.

b. Professionals.

All professionals or other Persons requesting compensation or
reimbursement of expenses pursuant to Sections 327, 328, 330, 331, 503(b),
506(b) or 1103 of the Bankruptcy Code for services rendered on or before the
Effective Date (including, without limitation, any compensation requested by any
professional or any other Person for making a substantial contribution in the
Reorganization Cases) shall File and serve on Reorganized CMI, Reorganized CMM
or Reorganized Holdings, as the case may be, and counsel for Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as the case may be, an application for
final allowance of compensation and reimbursement of expenses no later than
sixty (60) days after the Effective Date. Objections to applications of
professionals or other Persons for compensation or reimbursement of expenses
must be Filed and served on the Reorganized Debtors, counsel for the Reorganized
Debtors and the requesting professional or other Person not later than ninety
(90) days after the Effective Date.

On or as soon as reasonably practicable after the Effective Date,
Reorganized CMI shall pay the contractual claims of the Indenture Trustee for
its fees and expenses including its reasonable attorneys' fees and expenses. To
the extent, after being furnished with supporting documents for such fees and
expenses, Reorganized CMI disputes the reasonableness of any such fees and
expenses, Reorganized CMI shall negotiate in good faith to resolve such dispute.
To the extent that Reorganized CMI and the Indenture Trustee are unable to
resolve any dispute, the dispute shall be resolved by the Bankruptcy Court. The
Indenture Trustee shall not attach or set off any of its fees and expenses
against distributions to Holders of Old Senior Notes and shall not otherwise
withhold or delay any such distributions.

c. Ordinary Course Liabilities.

Except as provided herein, holders of Administrative Claims based on
liabilities incurred in the ordinary course of the Debtors' businesses (other
than Claims of governmental units for taxes or Claims and/or penalties related
to such taxes) shall not be required to File any request for payment of such
Claims. Such Administrative Claims shall be assumed and paid by Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as the case may be, pursuant to the
terms and conditions of the particular transactions giving rise to such
Administrative Claims, without any further action by the Holders of such Claims.
Any dispute with respect to ordinary course liabilities shall be submitted to
the Bankruptcy Court for resolution unless resolved by agreement of the parties.

d. Tax Claims.

All requests for payment of Post-Petition Tax Claims, for which no bar
date has otherwise been previously established, must be Filed on or before the
later of (i) sixty (60) days following the Effective Date, and (ii) 120 days
following the filing of the tax return for such

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<PAGE>

taxes for such tax year or period with the applicable governmental unit. Any
Holder of any Post-Petition Tax Claim that is required to File a request for
payment of such taxes and that does not File such a Claim by the applicable bar
date shall be forever barred from asserting any such Post-Petition Tax Claim
against the Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings,
or any of their respective properties, whether any such Post-Petition Tax Claim
is deemed to arise prior to, on or subsequent to the Effective Date.

B. Identification of Classes of Claims and Interests Impaired and Not
Impaired by the Plan.

1. Claims Against and Interests in CMI.

Classes A8, A12, A14, A15, A17, A19, A20, A22 and A23 are not Impaired
by the Plan. Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18 and
A21 are Impaired Classes under the Plan.

2. Claims Against and Interests in CMM.

Classes B3, B4 and B7 are not Impaired by the Plan. Classes B1, B2, B5
and B6 are Impaired Classes under the Plan.

3. Claims Against and Interests in Holdings.

Classes C3, C4 and C7 are not Impaired by the Plan. Classes C1, C2, C5
and C6 are Impaired Classes under the Plan.

C. Treatment of Claims Against and Interests in CMI.

1. Class A1 (Citicorp Secured Claims).

Reorganized CMI shall enter into on the Effective Date a refinancing of
the principal amount (or purchase price) owing to the Holder of the Allowed
Class A1 Claim with respect to the CMO-IV Bonds upon terms to be mutually agreed
upon by CMI and the Holder of the Allowed Class A1 Claim. In addition, the
Holder of the Allowed Class A1 Claim shall receive on the Effective Date payment
in full in Cash of any remaining balance of its Allowed Class A1 Claim after the
refinancing referred to in the preceding sentence, with interest on such Allowed
Claim calculated at the Plan Rate.

2. Class A2 (First Union Secured Claim).

The Holder of the Allowed Class A2 Claim shall receive on the Effective
Date payment in full in Cash of any remaining balance of its Allowed Class A2
Claim with interest thereon calculated at the Plan Rate.

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<PAGE>

3. Class A3 (GACC Secured Claim).

The Holder of the Allowed Class A3 Claim shall receive on the Effective
Date the treatment of its Allowed Secured Claim set forth on Exhibit 1 hereto,
or such other treatment as may be agreed to by CMI and the Holder of the Allowed
Class A3 Claim.

4. Class A4 (Lehman Secured Claim).

The Holder of the Allowed Class A4 Claim shall receive on the Effective
Date payment in full in Cash of any remaining balance of its Allowed Class A4
Claim with interest thereon calculated at the Plan Rate.

5. Class A5 (Merrill Secured Claim).

The Holder of the Allowed Class A5 Claim shall receive on the Effective
Date the treatment of its Allowed Secured Claim set forth on Exhibit 1 hereto,
or such other treatment as may be agreed to by CMI and the Holder of the Allowed
Class A5 Claim.

6. Class A6 (Morgan Stanley Secured Claim).

The Holder of the Allowed Class A6 Claim shall receive on the Effective
Date payment in full in Cash of any remaining balance of its Allowed Class A6
Claim with interest thereon calculated at the Plan Rate.

7. Class A7 (Other Secured Claims).

The Holder of an Allowed Class A7 Claim (if any) shall receive on the
Effective Date either (i) payment in full in Cash of the Allowed Class A7 Claim
with interest thereon calculated at the Plan Rate, (ii) if CMI so elects, the
collateral securing the Allowed Class A7 Claim (if any) in full satisfaction of
such Claim, or (iii) such other treatment as may be agreed to by CMI and the
Holder(s), if any, of Allowed Class A7 Claim(s).

8. Class A8 (Priority Claims).

The Holders of Allowed Class A8 Claims shall receive on the Effective
Date payment in full in Cash of Allowed Class A8 Claims including Plan Interest
thereon.

9. Class A9 (Old Senior Note Claims)

Each Holder of an Allowed Class A9 Claim as of the Distribution Record
Date shall receive on the Effective Date in exchange for its Old Senior Note
payment in full of its Allowed Class A9 Claim, with any accrued and unpaid
pre-petition interest thereon calculated at the Plan Rate and any accrued and
unpaid post-petition interest thereon calculated at the Plan Interest rate, in
the form of a Class A9 Note in a principal amount equal to such Holder's Allowed
Class A9 Claim. All Old Senior Notes shall be deemed cancelled as of the
Effective Date.

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<PAGE>

10. Class A10 (CMI General Unsecured Claims).

Each Holder of an Allowed Class A10 Claim shall receive on the
Effective Date payment in full of its Allowed Class A10 Claim as of the
Effective Date, with accrued and unpaid pre-petition interest thereon (if any)
calculated at the non-default contract rate of interest in such Holder's
documents for those Holders of Allowed Class A10 Claims who have an interest
rate applicable to such Holder's Allowed Class A10 Claim and any accrued and
unpaid post-petition interest thereon calculated at the Plan Interest rate, in
the form of (i) such Holder's Pro Rata share of the Class A10 Cash Payment
(after payment of the convenience class amount provided for hereinafter) and
(ii) a Class A10 Note in an amount equal to the remaining balance of such
Holder's Allowed Class A10 Claim. In lieu of the foregoing treatment, there
shall be a convenience class option as follows: any Holder of an Allowed Class
A10 Claim (or whose Allowed Claim is treated within this Class) whose Allowed
Claim is for $150,000 or less and elects the convenience class treatment on its
ballot, or whose Allowed Claim is for an amount in excess of $150,000 and elects
in writing on its ballot to reduce its claim to $150,000 and accept convenience
class treatment thereof, shall be entitled to receive payment in Cash on the
Effective Date of the allowed amount of such Holder's Allowed Class A10 Claim in
full satisfaction of said Claim, with accrued and unpaid pre-petition interest
thereon (if any) calculated at the non-default contract rate of interest in such
Holder's documents for those Holders of Allowed Class A10 Claims electing
convenience class treatment who have an interest rate applicable to such
Holder's Allowed Claim and any accrued and unpaid post-petition interest thereon
calculated at the Plan Interest rate. The total amount to be paid by CMI with
respect to the foregoing convenience class option shall not exceed the aggregate
amount of $10 million and such aggregate amount shall be paid from and thereby
reduce the funds in the Class A10 Cash Payment.

11. Class A11 (Guarantee Claims).

If, and only to the extent that, an Allowed Class A11 Claim is not
fully treated with respect to such Holder's underlying Allowed Claim under the
Plan treatment for Claims against CMM or Holdings, as the case may be, any
remaining Allowed Class A11 Claim (if any) shall be included as part of the CMI
General Unsecured Claims and treated for all purposes as part of Class A10.

12. Class A12 (Freddie Mac Claims).

CMI's obligation under the Freddie Mac Agreement shall be deemed
reaffirmed on the Effective Date, and the Claims of Freddie Mac numbered 335 and
497 on the July 2, 1999 claims register, each in the amount of $230,448,487.24,
shall be deemed withdrawn and thereby disallowed as of the Effective Date.

13. Class A13 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class A13 Claims
on account of such Claims.

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<PAGE>

14. Class A14 (Series B Preferred Stock).

Each Holder of Series B Preferred Stock as of the Effective Date shall
retain its Series B Preferred Stock and each Holder of Series B Preferred Stock
as of the Distribution Record Date shall receive payment in Cash on the
Effective Date of the amount of any accrued and past due dividends on its shares
of Series B Preferred Stock.

15. Class A15 (Series B Preferred Stock Securities Claims).

Each Holder of an Allowed Class A15 Claim (if any) shall, if, as and
when any such Claim is Allowed by Final Order, receive in full satisfaction of
any such Allowed Class A15 Claim its share of any Insurance Proceeds applicable
thereto plus, if such Allowed Class A15 Claim (if any) is not paid in full from
such Insurance Proceeds, CMI Common Stock in an amount equal in value, as of the
date of issuance thereof, to the balance (if any) of such Allowed Class A15
Claim, provided that any such Claim not timely filed (and in any event not filed
before the Confirmation Date) shall be released and discharged under the Plan
and the Confirmation Order.

16. Class A16 (Old Series C Preferred Stock).

Each Holder of Old Series C Preferred Stock as of the Distribution
Record Date shall receive in exchange for its Old Series C Preferred Stock an
identical number of shares of New Series C Preferred Stock issued effective as
of the Effective Date, plus Cash equal to the amount of any accrued and past due
dividends thereon, or such other treatment as may be agreed to by CMI, the CMI
Equity Committee and the Holder(s) of the Allowed Class A16 Interests. All
shares of Old Series C Preferred Stock shall be deemed cancelled as of the
Effective Date.

17. Class A17 (Old Series C Preferred Stock Securities Claims).

Each Holder of an Allowed Class A17 Claim (if any) shall, if, as and
when any such Claim is Allowed by Final Order, receive in full satisfaction of
any such Allowed Class A17 Claim its share of any Insurance Proceeds applicable
thereto plus, if such Allowed Class A17 Claim (if any) is not paid in full from
such Insurance Proceeds, CMI Common Stock in an amount equal in value, as of the
date of issuance thereof, to the balance (if any) of such Allowed Class A17
Claim, provided that any such Claim not timely filed (and in any event not filed
before the Confirmation Date) shall be released and discharged under the Plan
and the Confirmation Order.

18. Class A18 (Old Series D Preferred Stock).

Each Holder of Old Series D Preferred Stock as of the Distribution
Record Date shall receive in exchange for its Old Series D Preferred Stock an
identical number of shares of New Series D Preferred Stock issued effective as
of the Effective Date, plus Cash equal to the amount of any accrued and past due
dividends thereon, or such other treatment as may be agreed to by CMI, the CMI
Equity Committee and the Holder(s) of the Allowed Class A18 Interests. All
shares of Old Series D Preferred Stock shall be deemed cancelled as of the
Effective Date.

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<PAGE>

19. Class A19 (Old Series D Preferred Stock Securities Claim).

Each Holder of an Allowed Class A19 Claim (if any) shall, if, as and
when any such Claim is Allowed by Final Order, receive in full satisfaction of
any such Allowed Class A19 Claim its share of any Insurance Proceeds applicable
thereto plus, if such Allowed Class A19 Claim (if any) is not paid in full from
such Insurance Proceeds, CMI Common Stock in an amount equal in value, as of the
date of issuance thereof, to the balance (if any) of such Allowed Class A19
Claim, provided that any such Claim not timely filed (and in any event not filed
before the Confirmation Date) shall be released and discharged under the Plan
and the Confirmation Order.

20. Class A20 (Series F Dividend Preferred Stock).

Each Holder of Series F Dividend Preferred Stock as of the Effective
Date shall retain its Series F Dividend Preferred Stock. There shall be no
change in the relative rights and preferences of the Series F Dividend Preferred
Stock.

21. Class A21 (CMI Common Stock).

Each Holder of CMI Common Stock as of the Effective Date shall retain
its CMI Common Stock.

22. Class A22 (Stock Options).

Each Holder of a Stock Option as of the Effective Date shall retain its
Stock Option.

23. Class A23 (CMI Common Stock Securities Claims).

All Holders of Allowed Class A23 Claims as of the Effective Date shall
receive in full satisfaction of any such Allowed Class A23 Claims their share of
any Insurance Proceeds applicable thereto plus, if such Allowed Class A23 Claims
(if any) are not paid in full from such Insurance Proceeds, CMI Common Stock in
an amount equal in value, as of the date of issuance thereof, to the balance (if
any) of such Allowed Class A23 Claims.

D. Treatment of Claims Against and Interests in CMM.

1. Class B1 (First Union Secured Claims).

The Holder of the Allowed Class B1 Claim shall receive on the Effective
Date payment in full in Cash of any remaining balance of its Allowed Class B1
Claim with interest thereon calculated at the Plan Rate.

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<PAGE>

2. Class B2 (Other Secured Claims)

The Holder of an Allowed Class B2 Claim (if any) shall receive on the
Effective Date either (i) payment in full in Cash of the Allowed Class B2 Claim
with interest thereon calculated at the Plan Rate, (ii) if CMI so elects, the
collateral securing the Allowed Class B2 Claim (if any) in full satisfaction of
such Claim, or (iii) such other treatment as may be agreed to by CMI and the
Holder(s), if any, of Allowed Class B2 Claim(s).

3. Class B3 (Priority Claims).

The Holders of Allowed Class B3 Claims shall receive on the Effective
Date payment in full in Cash of Allowed Class B3 Claims including Plan Interest
thereon.

4. Class B4 (Guarantee Claims).

The Holders of Allowed Class B4 Claims (if any) shall be paid, if, as
and when any such Claim is allowed by Final Order, in Cash in full by CMM or
Reorganized CMM including Plan Interest thereon if, and only to the extent, not
fully treated with respect to such Holder's underlying Allowed Claim under the
Plan treatment for Claims against CMI or Holdings, as the case may be.

5. Class B5 (CMM General Unsecured Claims).

The Holders of Allowed Class B5 Claims shall receive on the Effective
Date payment in full in Cash of Allowed Class B5 Claims, with accrued and unpaid
pre-petition interest thereon (if any) calculated at the non-default contract
rate of interest in such Holder's documents for those Holders of Allowed Class
B5 Claims who have an interest rate applicable to such Holder's Allowed Class B5
Claim and any accrued and unpaid post-petition interest thereon calculated at
the Plan Interest rate.

6. Class B6 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class B6 Claims
on account of such Claims.

7. Class B7 (CMI's Interests in CMM).

The Holder of the Class B7 Interest shall retain its Interest under the
Plan.

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<PAGE>

E. Treatment of Claims Against and Interests in Holdings.

1. Class C1 (Citicorp Secured Claims).

The Holder of any remaining Allowed Class C1 Claim (if any) shall
receive on the Effective Date payment in full in Cash of the Allowed Class C1
Claim with interest thereon calculated at the Plan Rate.

2. Class C2 (Other Secured Claims).

The Holder of an Allowed Class C2 Claim (if any) shall receive on the
Effective Date either (i) payment in full in Cash of the Allowed Class C2 Claim
with interest thereon calculated at the Plan Rate, (ii) if CMI so elects, the
collateral securing the Allowed Class C2 Claim (if any) in full satisfaction of
such Claim, or (iii) such other treatment as may be agreed to by CMI and the
Holder(s), if any, of Allowed Class C2 Claim(s).

3. Class C3 (Priority Claims).

The Holders of Allowed Class C3 Claims shall receive on the Effective
Date payment in full in Cash of Allowed Class C3 Claims including Plan Interest
thereon.

4. Class C4 (Guarantee Claims).

The Holders of Allowed Class C4 Claims (if any) shall receive if, as
and when any such Claim is allowed by Final Order payment in Cash in full
including Plan Interest thereon if, and only to the extent, not fully treated
with respect to such Holder's underlying Allowed Claim under the Plan treatment
for Claims against CMI or CMM, as the case may be.

5. Class C5 (Holdings General Unsecured Claims).

The Holders of Allowed Class C5 Claims (if any) shall, if, as and when
any such Claim is allowed by Final Order, be included as part of the CMI General
Unsecured Claims and included for all purposes in the treatment provided in
Class A10 hereinabove.

6. Class C6 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class C6 Claims
on account of such Claims.

7. Class C7 (Interests in Holdings).

The Holders of the Class C7 Interests shall retain their Interests
under the Plan.

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<PAGE>

F. Modification of Treatment of Claims.

The Debtors reserve for themselves and the Reorganized Debtors the
right to modify the treatment of any Allowed Claim or Interest in any manner
adverse only to the Holder of such Claim or Interest at any time after the
Effective Date upon the consent of the creditor or interest holder whose Allowed
Claim or Interest, as applicable, is being adversely affected.

V. DISTRIBUTIONS UNDER THE PLAN
A. Disbursing Agent.

The Reorganized Debtors, or such Person(s) as the Debtors may employ in
their sole discretion, will act as Disbursing Agent under the Plan. The
Disbursing Agent shall make all distributions of Cash required to be distributed
under the applicable provisions of the Plan and any documents executed in
connection therewith. The Disbursing Agent may employ or contract with other
entities to assist in or make the distributions required by the Plan and any
documents executed in connection therewith. Each Disbursing Agent will serve
without bond, and each Disbursing Agent, without further Bankruptcy Court
approval, will receive reasonable compensation for distribution services
rendered pursuant to the Plan and reimbursement of reasonable out-of-pocket
expenses incurred in connection with such services from the Reorganized Debtors
on terms acceptable to the Reorganized Debtors.

B. Timing of Distributions.

Except as otherwise provided in this Plan with respect to any
particular Claim or Interest, property to be distributed hereunder on account of
Allowed Claims and Allowed Interests (a) shall be distributed on the date
provided for distribution with respect to that Class or as soon as practicable
thereafter to each Holder of an Allowed Claim or an Allowed Interest in that
Class that is an Allowed Claim or an Allowed Interest as of said distribution
date, and (b) shall be distributed to each Holder of an Allowed Claim or an
Allowed Interest of that Class that becomes an Allowed Claim or Allowed Interest
after the distribution date as soon as practicable after the Order of the
Bankruptcy Court allowing such Claim or Interest becomes a Final Order.

C. Methods of Distributions.

1. Cash Payments.

Cash payments made pursuant to the Plan will be in United States
dollars. Cash payments to foreign creditors may be made, at the option of the
Debtors or the Reorganized Debtors, in such funds and by such means as are
necessary or customary in a particular foreign jurisdiction. Cash payments made
pursuant to the Plan in the form of checks issued by Reorganized Debtors shall
be null and void if not cashed within 90 days of the date of the issuance
thereof. Requests for reissuance of any check shall be made directly to the
Disbursing Agent as set forth in Section V.G below. Cash payments may, at the
option of the Debtors or Reorganized Debtors, be made by wire transfer.

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<PAGE>

2. Compliance with Tax Requirements.

In connection with the distributions set forth herein, to the extent
applicable, the Disbursing Agent shall comply with all tax withholding and
reporting requirements imposed on it by any governmental unit, and all
distributions pursuant to this Plan shall be subject to such withholding and
reporting requirements. The Disbursing Agent shall be authorized to take any and
all actions that may be necessary or appropriate to comply with such withholding
and reporting requirements.

Notwithstanding any other provision contained herein: (i) each Holder
of an Allowed Claim or Allowed Interest that is to receive a distribution of
Cash pursuant to the Plan shall have sole and exclusive responsibility for the
satisfaction and payment of any tax obligations imposed by any governmental
unit, including income, withholding and other tax obligations, on account of
such distribution; and (ii) no distribution shall be made to or on behalf of
such Holder pursuant to the Plan unless and until such Holder has made
arrangements reasonably satisfactory to the Disbursing Agent for the payment and
satisfaction of such tax obligations. Any distributions pursuant to the Plan
will, pending the implementation of such arrangements, be treated as an
undeliverable distribution pursuant to Section V.G of the Plan.

D. Distribution Record Date.

As of the close of business on the Distribution Record Date, the
transfer registers for the Old Securities maintained by the Debtors, or their
respective agents, will be closed. The Disbursing Agent and its respective
agents and the Indenture Trustee will have no obligation to recognize the
transfer of any Old Securities occurring after the Distribution Record Date, and
will be entitled for all purposes relating to this Plan to recognize and deal
only with those Holders of record as of the close of business on the
Distribution Record Date.

E. Surrender of Cancelled Old Securities and Exchange of Old Securities for New
Securities.

1. Tender of Old Securities.

The mechanism by which Holders of Allowed Claims and Allowed Interests
surrender their Old Securities in order to receive Cash, if and as applicable
under this Plan, and to exchange such Old Securities for New Securities (as
applicable), shall be determined based upon the manner in which the Old
Securities were issued and the mode in which they are held, as set forth below.

a. Old Securities Held in Book-Entry Form

Old Securities held in book-entry form through bank and broker nominee
accounts shall be mandatorily cancelled and (i) Cash distributed, if and as
applicable under this Plan, and (ii) mandatorily exchanged for New Securities
(as applicable) through the facilities of such nominees and the systems of the
applicable securities depository or Clearing System holding such Old Securities
on behalf of the brokers or banks.

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<PAGE>

b. Old Securities in Physical, Registered, Certificated Form

Each Holder of Old Securities in physical, registered, certificated
form will be required, on or before the Effective Date, to deliver its physical
notes or certificates (the "Tendered Certificates") to the Disbursing Agent,
accompanied by a properly executed letter of transmittal, to be distributed by
the Disbursing Agent after the Confirmation Date and containing such
representations and warranties as are described in the Disclosure Statement (a
"Letter of Transmittal").

Any Cash or New Securities to be distributed pursuant to this Plan on
account of any Allowed Claim or Allowed Interest represented by an Old Security
held in physical, registered, certificated form shall, pending such surrender,
be treated as an undeliverable distribution pursuant to Section V.G below.

Signatures on a Letter of Transmittal must be guaranteed by an Eligible
Institution (as defined below), unless the Old Securities tendered pursuant
thereto are tendered for the account of an Eligible Institution. If signatures
on a Letter of Transmittal are required to be guaranteed, such guarantees must
be by a member firm of a registered national securities exchange in the United
States, a member of the National Association of Securities Dealers, Inc., or a
commercial bank or trust company having an office or a correspondent in the
United States (each of which is an "Eligible Institution"). If Old Securities
are registered in the name of a Person other than the Person signing the Letter
of Transmittal, the Old Securities, in order to be tendered validly, must be
endorsed or accompanied by a properly completed power of authority, with
signature guaranteed by an Eligible Institution.

All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Letters of Transmittal and Tendered Certificates will
be resolved by the applicable Disbursing Agent, whose determination shall be
final and binding, subject only to review by the Bankruptcy Court upon
application with due notice to any affected parties in interest. CMI reserves
the right, on behalf of itself and the Disbursing Agent, to reject any and all
Letters of Transmittal and Tendered Certificates not in proper form, or Letters
of Transmittal and Tendered Certificates, the Disbursing Agent's acceptance of
which would, in the opinion of the Disbursing Agent or its counsel, be unlawful.

2. Delivery of New Securities in Exchange for Old Securities.

On the Effective Date, Reorganized CMI or the Disbursing Agent shall
issue and authenticate the New Securities and shall apply to DTC to make the
New Securities eligible for deposit at DTC. With respect to Holders of Old
Securities who hold such Old Securities through nominee accounts at bank and
broker participants in DTC or any similar clearing system, the Disbursing
Agent shall deliver the New Securities to DTC or to the registered address
specified by the Clearing System. The Clearing System (or its depositary)
shall return the applicable Old Securities to the Disbursing Agent for
cancellation.

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<PAGE>

effective date of such exchange, each DTC participant will effect a similar
exchange for accounts of the beneficial owners holding Old Securities through
such firms. Neither the Debtors, Reorganized Debtors nor the Disbursing Agent
shall have any responsibility or liability in connection with the Clearing
Systems' or such participants' effecting, or failure to effect, such exchanges.

Holders of Old Securities holding such Old Securities outside a
Clearing System will be required to surrender their Old Securities by delivering
them to the Disbursing Agent, along with properly executed Letters of
Transmittal (as described above in Section V.E.1.b). The Disbursing Agent shall
forward the New Securities on account of such Old Securities to such Holders.

3. Special Procedures for Lost, Stolen, Mutilated or Destroyed
Instruments.

Any Holder of a Claim or an Interest evidenced by an Instrument that
has been lost, stolen, mutilated or destroyed will, in lieu of surrendering such
Instrument, deliver to the Disbursing Agent: (a) an affidavit of loss or other
evidence reasonably satisfactory to the Disbursing Agent of the loss, theft,
mutilation or destruction; and (b) such security or indemnity as may reasonably
be required by the Disbursing Agent to hold the Disbursing Agent harmless from
any damages, liabilities or costs incurred in treating such individual as a
Holder of an Instrument. Upon compliance with this Section, the Holder of a
Claim or Interest evidenced by any such lost, stolen, mutilated or destroyed
Instrument shall, for all purposes under the Plan and notwithstanding anything
to the contrary contained herein, be deemed to have surrendered such Instrument.

4. Failure to Surrender Cancelled Instrument.

Any Holder of Old Securities holding such Old Securities in physical,
registered or certificated form who has not properly completed and returned to
the Disbursing Agent a Letter of Transmittal, together with the applicable
Tendered Certificates, within two years after the Effective Date shall have its
claim for a distribution pursuant to the Plan on account of such Instrument
discharged and shall be forever barred from asserting any such claim against
Reorganized CMI, Reorganized CMM or Reorganized Holdings or their properties.
In such cases, any Cash or New Securities held for distribution on account of
such claim shall be disposed of pursuant to the provisions of Section V.G
hereof.

F. Release of Security Interests in or Other Claims to or against Assets or
Property of the Reorganized Debtors by Creditors Paid Pursuant to the Plan.

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<PAGE>

documents and take such actions as may be reasonably required by the Reorganized
Debtors to effectuate the transfer or retransfer back to the Reorganized Debtors
of all collateral security, or assets or property held subject to alleged
repurchase agreements, free and clear of all liens, security interests, claims
or interests in or to such collateral, assets or property by such Holder, and
shall confirm the foregoing in writing if requested by the Reorganized Debtors.

G. Delivery of Distributions; Undeliverable or Unclaimed Distributions.

Any Person that is entitled to receive a Cash distribution under this
Plan but that fails to cash a check within 90 days of its issuance shall be
entitled to receive a reissued check from Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, for the amount of the original check,
without any interest, if such Person requests the Disbursing Agent to reissue
such check and provides the Disbursing Agent with such documentation as the
Disbursing Agent reasonably requests to verify that such Person is entitled to
such check, prior to the second anniversary of the Effective Date. If a Person
fails to cash a check within 90 days of its issuance and fails to request
reissuance of such check prior to the second anniversary of the Effective Date,
such Person shall not be entitled to receive any distribution under this Plan.

Subject to Bankruptcy Rule 9010, all distributions to any Holder of an
Allowed Claim or an Allowed Interest shall be made to the address of such Holder
on the books and records of the Debtors or their agents, unless Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as applicable, has been notified in
writing of a change of address. If the distribution to any Holder of an Allowed
Claim or Allowed Interest is returned to a Disbursing Agent as undeliverable,
such Disbursing Agent shall use reasonable efforts to determine the current
address of such Holder, but no distribution shall be made to such Holder unless
and until the applicable Disbursing Agent has determined or is notified in
writing of such Holder's then-current address, at which time such distribution
shall be made to such Holder without any additional interest on such
distribution after the Effective Date. Undeliverable distributions shall remain
in the possession of the applicable Disbursing Agent pursuant to Section V.A of
the Plan until such time as a distribution becomes deliverable. Undeliverable
Cash or New Securities shall be held in trust by the applicable Disbursing Agent
for the benefit of the potential claimants of such funds or securities, and will
be accounted for separately. Any Disbursing Agent holding undeliverable Cash
shall invest such Cash in a manner consistent with the Debtors' investment and
deposit guidelines. Any interest paid, and any other amounts earned, with
respect to such undeliverable Cash pending its distribution in accordance with
this Plan shall be property of Reorganized CMI, Reorganized CMM or Reorganized
Holdings, as the case may be. Any unclaimed or undeliverable distributions
(including Cash and New Securities) shall be deemed unclaimed property under
Section 347 (b) of the Bankruptcy Code at the expiration of two years after the
Effective Date and, after such date, all such unclaimed property shall revert to
Reorganized CMI, Reorganized CMM, or Reorganized Holdings, as the case may be,
and the Claim or Interest of any Holder with respect to such property shall be
discharged and forever barred.

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H. Procedures for Treating Disputed Claims Under Plan of Reorganization.

1. Disputed Claims.

a. Process.

If any of the Debtors or Reorganized Debtors disputes any Claim, such
dispute shall be determined, resolved or adjudicated, as the case may be, under
applicable law. Among other things, any Debtor or Reorganized Debtors may elect,
at its sole option, to object or seek estimation under Section 502 of the
Bankruptcy Code with respect to any proof of Claim filed by or on behalf of a
Holder of a Claim or any proof of Interest filed by or on behalf of a Holder of
an Interest.

b. Tort Claims.

All Tort Claims are Disputed Claims. Any unliquidated Tort Claim that
is not otherwise settled or resolved pursuant to Section V.H.l.a above shall be
determined and liquidated under applicable law in the Bankruptcy Court or the
administrative or judicial tribunal in which it is pending on the Confirmation
Date or, if no such action was pending on the Confirmation Date, in the
Bankruptcy Court or any administrative or judicial tribunal of appropriate
jurisdiction. Pursuant to Section IX.E hereof, the automatic stay arising
pursuant to Section 362 of the Bankruptcy Code shall be vacated as of the
Effective Date as to all Tort Claims. Any Tort Claim determined and liquidated
pursuant to a judgment obtained in accordance with this Section V.H. l.b and
applicable non-bankruptcy law that is no longer subject to appeal or other
review and that is not paid by applicable insurance coverage shall be deemed to
be an Allowed Claim in Class A10, B5 or C5, as applicable, in such liquidated
amount and satisfied in accordance with this Plan. Nothing contained in this
Section V.H.l.b shall constitute or be deemed a waiver of any claim, right or
cause of action that the Debtors or the Reorganized Debtors may have against any
Person in connection with or arising out of any Tort Claim, including, without
limitation, any rights under Section 157(b) of title 28, United States Code.

2. Objections to Claims and Interests.

Except insofar as a Claim or Interest is allowed hereunder, Reorganized
CMI, Reorganized CMM and Reorganized Holdings shall be entitled and reserve the
right to object to Claims and Interests. Except as otherwise provided in Section
V.H.3 below and except as otherwise ordered by the Bankruptcy Court, objections
to any Claim or Interest, including, without limitation, Administrative Claims,
shall be Filed and served upon the Holder of such Claim or Interest no later
than 90 days after the Effective Date, unless such period, is, extended by the
Bankruptcy Court, which extension may be granted on an ex parte basis without
notice or hearing. After the Confirmation Date, only the Debtors, Reorganized
CMI, Reorganized CMM or Reorganized Holdings shall have the authority to File,
settle, compromise, withdraw or litigate to judgment objections to Claims and
Interests. From and after the Confirmation Date, the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings may settle or compromise any Disputed
Claim or Disputed Interest without approval of the Bankruptcy Court. Except as
(i) specified otherwise herein, or (ii) ordered by the Bankruptcy Court, all
Disputed Claims or Disputed Interests shall be resolved by the Bankruptcy Court.
The failure of the

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Debtors to object to any Claim or Interest for voting purposes shall not be
deemed to be a waiver of the Debtors' or Reorganized Debtors right to object to
any Claim or Interest in whole or in part thereafter.

3. Professional Claims.

Except as otherwise ordered by the Bankruptcy Court, objections to
Claims of professionals shall be governed by the provisions of Section IV.A.3.b
hereof.

4. No Distributions Pending Allowance.

Notwithstanding any other provisions of this Plan, no payments or
distributions will be made on account of a Disputed Claim or a Disputed Interest
until such Claim or Interest becomes an Allowed Claim or Allowed Interest. If an
interest-bearing reserve account is established for a Disputed Claim, interest
accruing on such Claim after the establishment of such reserve account (if it is
ultimately Allowed by Final Order or settlement between such Holder and the
applicable Reorganized Debtor) shall be limited to interest actually earned on
the reserve account for such Claim.

5. Distributions on Account of Disputed Claims and Interests Once They
are Allowed.

Within 30 days after the end of each calendar quarter following the
Effective Date, the applicable Disbursing Agent will make all distributions on
account of any Disputed Claim or Disputed Interest that has become an Allowed
Claim or Allowed Interest during the preceding calendar quarter. Such
distributions will be made pursuant to the provisions of the Plan governing the
applicable Class. Holders of Disputed Claims or Disputed Interests that are
ultimately allowed will also be entitled to receive, on the basis of the amount
ultimately allowed, any interest payments, dividends or other payments made to
the Class to which such Claim or Interest belongs, but held pending
distribution.

I. Setoffs.

Except with respect to any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan, the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be,
may, pursuant to Section 553 or Section 502(d) of the Bankruptcy Code or
applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of such Claim (before
any distribution is made on account of such Claim), the claims, rights and
causes of action of any nature that the Debtors, Reorganized CMI, Reorganized
CMM or Reorganized Holdings may hold against the Holder of such Allowed Claim;
provided, however, that neither the failure to effect such a setoff nor the
allowance of any Claim hereunder shall constitute a waiver or release by the
Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings of any such
claims, rights and causes of action that the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings may possess against such Holder.

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VI. INDIVIDUAL HOLDER PROOFS OF INTEREST

Holders of Interests in Classes A14, A16, A18, A20, A21, A22, B7 and C7
are not required to File proofs of Interests unless they disagree with the
number of shares set forth on the applicable stock register.

VII. TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

A. Assumptions.

Except as otherwise provided herein, on the Effective Date, pursuant to
Section 365 of the Bankruptcy Code, the Debtors will assume each executory
contract and unexpired lease entered into by the Debtors prior to the Petition
Date that has not previously (a) expired or terminated pursuant to its own terms
or (b) been assumed or rejected pursuant to Section 365 of the Bankruptcy Code.
The Confirmation Order will constitute an Order of the Bankruptcy Court
approving the assumptions described in this Article VII, pursuant to Section 365
of the Bankruptcy Code, as of the Effective Date.

B. Cure of Defaults in Connection with Assumption.

Any monetary amounts by which each executory contract or unexpired
lease to be assumed pursuant to the Plan is in default will be satisfied,
pursuant to Section 365 (b) (1) of the Bankruptcy Code, at the option of the
Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case
may be: (a) by payment of the default amount in Cash on the Effective Date or as
soon as practicable thereafter; or (b) on such other terms as are agreed to by
the parties to such executory contract or unexpired lease.

If there is a dispute regarding: (i) the amount of any cure payments;
(ii) the ability of Reorganized CMI, Reorganized CMM or Reorganized Holdings to
provide "adequate assurance of future performance" (within the meaning of
Section 365 of the Bankruptcy Code) under the contract or lease to be assumed;
or (iii) any other matter pertaining to assumption, the cure payments required
by Section 365 (b) (1) of the Bankruptcy Code will be made following the entry
of a Final Order resolving the dispute and approving the assumption.

C. Rejections.

Except as otherwise provided herein, on the Effective Date, pursuant to
Section 365 of the Bankruptcy Code, the Debtors will reject each of the
executory contracts and unexpired leases listed on a schedule to be filed prior
to the Confirmation Hearing (the "Contract Rejection Schedule"); provided,
however, that the Debtors reserve the right, at any time prior to the Effective
Date, to amend such schedule to delete any executory contract or unexpired lease
listed therein, thus providing for its assumption pursuant to Sections VII.A and
B above. Each contract and lease listed on the Contract Rejection Schedule will
be rejected only to the extent that any such contract or lease constitutes an
executory contract or unexpired lease. Listing a contract or lease on the
Contract Rejection Schedule does not constitute an admission by the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings that such contract or
lease is an executory contract or unexpired lease or that the Debtors,
Reorganized CMI, Reorganized CMM

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or Reorganized Holdings has any liability thereunder. The Confirmation Order
shall constitute an Order of the Bankruptcy Court approving such rejections,
pursuant to Section 365 of the Bankruptcy Code, as of the Effective Date.

D. Bar Date for Rejection Damages.

If the rejection of an executory contract or unexpired lease pursuant
to the preceding Section VII.C gives rise to a Claim by the other party or
parties to such contract or lease, such Claim shall be forever barred and shall
not be enforceable against the Debtors, Reorganized CMI, Reorganized CMM or
Reorganized Holdings, their successors or properties unless (a) a stipulation
with respect to the amount and nature of such Claim has been entered into by
either of the Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings,
as applicable, and the Holder of such Claim in connection with the rejection of
such executory contract or unexpired lease, or (b) a Proof of Claim is Filed and
served on Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case
may be, and counsel for Reorganized CMI, Reorganized CMM or Reorganized
Holdings, as the case may be, within 30 days after the Effective Date or such
earlier date as established by the Bankruptcy Court. Unless otherwise ordered by
the Bankruptcy Court. all Allowed Claims arising from the rejection of executory
contracts or unexpired leases shall be treated as Claims in Class A10, B5 or C5,
as applicable.

VIII. ACCEPTANCE OR REJECTION OF THE PLAN

A. Voting Classes.

The Holders of Allowed Claims and Interests in Classes A1, A2, A3, A4,
A5, A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2, B5, B6, C1, C2, C5 and C6
are Impaired and shall be entitled to vote to accept or reject the Plan.

B. Presumed Acceptances of Plan.

The Holders of Allowed Claims and Interests in Classes A8, A12, A14,
A15, A17, A19, A20, A22, A23, B3, B4, B7, C3, C4 and C7 are not Impaired under
the Plan and, therefore, are conclusively presumed to accept the Plan.

C. Confirmability of Plan and Cramdown

To the extent that any Impaired Class votes to reject the Plan or is
deemed to have rejected the Plan, the Debtors and the CMI Equity Committee will
request that the Bankruptcy Court confirm the Plan under the "cramdown"
provisions of Section 1129(b) of the Bankruptcy Code.

IX. MEANS FOR EXECUTION AND IMPLEMENTATION OF THE PLAN

A. Corporate Structure.

On the Effective Date, CMI will become Reorganized CMI, CMM will become
Reorganized CMM, and Holdings will became Reorganized Holdings. Reorganized CMM
will

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be a wholly-owned subsidiary of Reorganized CMI, and Reorganized CMI will be the
general partner of Reorganized Holdings.

B. Corporate Action.

1. Cancellation of Old Securities and Related Agreements.

On the Effective Date, except as otherwise provided by the Plan the Old
Securities and all instruments, indentures and agreements evidencing or
governing such Old Securities shall be deemed terminated, canceled, extinguished
and of no further force or effect without any further action on the part of the
Bankruptcy Court, or any person or any government entity or agency, and except
as otherwise provided herein, the Debtors and the Reorganized Debtors shall be
released from any and all obligations under such securities, instruments,
indentures and agreements. Holders of cancelled Old Securities will have no
rights arising from or relating to such Old Securities or the cancellation
thereof, except the rights provided pursuant to this Plan.

2. Articles of Incorporation and Bylaws for Reorganized CMI.

On the Effective Date, Reorganized CMI shall be deemed to have adopted
the Reorganized CMI Articles of Incorporation and the Reorganized CMI Bylaws
pursuant to applicable nonbankruptcy law and Section 1123(a)(5)(I) of the
Bankruptcy Code. The Reorganized CMI Articles of Incorporation will, among other
provisions, increase the number of authorized shares of common stock and
prohibit the issuance of nonvoting equity securities to the extent required by
Section 1123 (a) (6) of the Bankruptcy Code. The Reorganized CMI Articles of
Incorporation and the Reorganized CMI Bylaws will become effective, without any
requirement of further action by stockholders of CMI or Reorganized CMI, on the
Effective Date. The Reorganized CMI Articles of Incorporation shall be filed
with the Maryland Department of Assessments and Taxation on the Effective Date.

3. Articles of Incorporation and Bylaws for Reorganized CMM.

On the Effective Date, Reorganized CMM shall be deemed to have adopted
the Reorganized CMM Articles of Incorporation and the Reorganized CMM Bylaws
pursuant to applicable non-bankruptcy law and Section 1123(a)(5)(I) of the
Bankruptcy Code. The Reorganized CMM Articles of Incorporation will, among other
provisions, prohibit the issuance of nonvoting equity securities to the extent
required by Section 1123 (a) (6) of the Bankruptcy Code. The Reorganized CMM
Articles of Incorporation and the Reorganized CMM Bylaws will become effective,
without any requirement of further action by the stockholder of CMM or
Reorganized CMM, on the Effective Date. The Reorganized CMM Articles of
Incorporation (if applicable) shall be filed with the Maryland Department of
Assessments and Taxation on the Effective Date.

4. Directors and Management of Reorganized CMI.

As of the Effective Date, the Persons identified at or before the
Confirmation Hearing in a schedule to be filed by CMI with the Bankruptcy Court
will serve as the initial members of the Board of Directors of Reorganized CMI.
Such Persons shall be deemed elected to the Board of

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Directors of CMI, and such elections shall be deemed effective as of the
Effective Date, without any requirement of further action by stockholders of CMI
or Reorganized CMI. The initial officers of Reorganized CMI shall be selected by
the Board of Directors of Reorganized CMI and their names will be disclosed in a
schedule to be Filed with the Bankruptcy Court at or before the Confirmation
Hearing. Subject to any requirement of Bankruptcy Court approval under Section
1129(a)(5) of the Bankruptcy Code, those persons identified or designated as
directors and officers of Reorganized CMI in the schedule to be Filed with the
Bankruptcy Court at or before the Confirmation Hearing shall assume their
offices as of the Effective Date and shall continue to serve in such capacities
thereafter, pending further action of the Board of Directors or stockholders of
Reorganized CMI in accordance with the Reorganized CMI Bylaws, Reorganized CMI
Articles of Incorporation and applicable state law.

5. Directors and Management of Reorganized CMM and Reorganized
Holdings.

As of the Effective Date, the Persons identified at or before the
Confirmation Hearing in a schedule to be filed by CMM with the Bankruptcy Court
will serve as the initial members of the Board of Directors of Reorganized CMM.
Such Persons shall be deemed elected to the Board of Directors of CMM, and such
elections shall be deemed effective as of the Effective Date, without any
requirement of further action by stockholders of CMM or Reorganized CMM. The
initial officers of Reorganized CMM shall be selected by the Board of Directors
of Reorganized CMM and their names will be disclosed in a schedule to be Filed
with the Bankruptcy Court at or before the Confirmation Hearing. Subject to any
requirement of Bankruptcy Court approval under Section 1129(a)(5) of the
Bankruptcy Code, those persons identified or designated as directors and
officers of Reorganized CMM in the schedule to be Filed with the Bankruptcy
Court at or before the Confirmation Hearing shall assume their offices as of the
Effective Date and shall continue to serve in such capacities thereafter,
pending further action of the Board of Directors or the stockholder of
Reorganized CMM in accordance with the Reorganized CMM Bylaws, Reorganized CMM
Articles of Incorporation and applicable state law.

As of the Effective Date, Reorganized CMI shall remain the sole general
partner of Reorganized Holdings and CMSLP shall remain the sole limited partner
in Reorganized Holdings. It is contemplated that at some time after the
Effective Date, Reorganized Holdings will be dissolved unless the partners in
Reorganized Holdings otherwise determine.

6. No Further Corporate Action.

Each of the matters provided for under this Plan involving the
corporate structure of any Debtor or Reorganized Debtor or corporate action to
be taken by or required of any Debtor or Reorganized Debtor shall, as of the
Effective Date, be deemed to have occurred and be effective as provided herein,
and shall be authorized and approved in all respects without any requirement of
further action by stockholders or directors of any of the Debtors or Reorganized
Debtors.

C. Implementation.

The Debtors, Reorganized CMI, Reorganized CMM and Reorganized Holdings
are hereby authorized and directed to take all necessary steps, and perform all
necessary acts, to consummate the terms and conditions of the Plan on and after
the Effective Date. On or before

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<PAGE>

the Effective Date, the Debtors may file with the Bankruptcy Court such
agreements and other documents as may be necessary or appropriate to effectuate
or further evidence the terms and conditions of this Plan and the other
agreements referred to herein or contemplated hereby.

D. Effectuating Documents and Actions.

The Debtors, Reorganized CMI, Reorganized CMM and Reorganized Holdings,
as the case may be, and each of their respective appropriate officers shall be
authorized to execute and deliver such contracts, instruments, releases, and
other agreements or documents and take such other actions as may be necessary or
appropriate to effectuate and further evidence the terms and conditions of this
Plan, the transactions provided for in the Plan and all other actions in
connection herewith.

E. Term of Injunctions or Stays.

Unless provided in the Confirmation Order or otherwise, all injunctions
or stays imposed in the Reorganization Cases pursuant to Sections 105 and 362 of
the Bankruptcy Code or otherwise in effect on the Confirmation Date shall remain
in full force and effect until the Effective Date.

F. No Interest; Disallowance of Penalties and Premiums.

Except as expressly provided herein, no Holder of an Allowed Claim or
Allowed Interest shall receive interest on the distribution to which such Holder
is entitled hereunder, regardless of whether such distribution is made on the
Effective Date or thereafter. Any and all Claims for or in the nature of
penalties or premiums allegedly owing shall be disallowed including, but not
limited to, prepayment penalties, penalty interest, makewhole premiums or
prepayment premiums.

G. Retiree Benefits.

On and after the Effective Date, to the extent required by Section
1129(a)(13) of the Bankruptcy Code, Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, shall continue to pay all retiree
benefits (if any), as the term "retiree benefits" is defined in Section 1114(a)
of the Bankruptcy Code, maintained or established by the Debtors prior to the
Confirmation Date.

H. Recapitalization Financing Including Issuance of New Securities.

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On the Effective Date, all securities, instruments, corporate documents, and
agreements entered into pursuant to or contemplated by the Plan, including,
without limitation, the New Securities, any other security and any instrument,
corporate document, or agreement entered into in connection with any of the
transactions referenced in this Section or Section IX.I, shall become effective,
binding and enforceable in accordance with their respective terms and conditions
upon the parties thereto without further act or action under applicable law,
regulation, order or rule, and shall be deemed to become effective
simultaneously.

I. Sale of the CMBS Sale Portfolio.

On or before the Effective Date, the commercial mortgage-backed
securities and any other assets in the CMBS Sale Portfolio shall be sold in
accordance with the terms of this Plan and any Orders with respect thereto
entered by the Bankruptcy Court. The proceeds thereof shall be used to pay
Allowed Secured Claims in accordance with any Orders entered by the Bankruptcy
Court with respect thereto and otherwise used as part of the funding of the
Plan.

J. Potential New Equity Investment and Rights Offering.

Although not required to fund this Plan, the Debtors, in consultation
with the CMI Equity Committee, may seek new equity capital from one or more
investors to partially fund the Reorganized Debtors and this Plan as
Recapitalization Financing. In such event, this Plan will be amended to
appropriately reflect such new equity capital transaction. If new equity capital
is sought, it is likely to take the form of a private issuance of preferred
stock with such relative rights and preferences as may be agreed to consistent
with the terms of this Plan.

In the event new equity capital is sought from an investor, it is also
anticipated that an offering of rights to purchase common stock or a new series
of preferred stock, with rights and preferences similar to the preferred stock
likely to be issued to the new equity capital investor but with limited voting
rights, would be made to Holders of CMI Common Stock. Such rights offering will
be developed in consultation with the CMI Equity Committee. Such rights offering
would commence on the Effective Date and would be for a percentage of the
aggregate face value of the securities issued to the new equity capital
investor. All or a portion of the proceeds of the rights offering may be used to
redeem at face value the securities issued to the new equity investor.

Even if CMI does not seek new equity from an investor, an offering of
rights to purchase CMI Common Stock may be made to Holders of CMI Common Stock
in connection with the Plan. Such rights offering would be developed in
consultation with the CMI Equity Committee.

In the event new equity capital is sought from an investor and a rights
offering is made to Holders of CMI Common Stock or a rights offering is made to
Holders of CMI Common Stock independent of any new equity investment by an
investor, the CMI Common Stock will be exchanged for new CMI Common Stock (on a
one share per one share basis) and rights (one right per share) structured to
ensure that the value of the CMI Common Stock exchanged exceeds the value of the
fresh capital raised in the rights offering, thereby making the exchange
principally in exchange for an interest and only partly for cash and rendering
applicable the limited transactional exemption from securities law registration
afforded by Section 1145 of the Bankruptcy Code. If a rights offering is made
and an exchange of CMI Common Stock, consistent with the foregoing, is effected,
then CMI's existing Series B Preferred Stock, Series C

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Preferred Stock, Series D Preferred Stock and Stock Options would be exchanged
for new Series B Preferred Stock, Series C Preferred Stock, Series D Preferred
Stock and Stock Options, respectively.

K. Second Amended and Restated Stock Option Plan.

On or prior to the Effective Date, the Second Amended and Restated
Stock Option Plan will be adopted by CMI and, by voting to accept this Plan, all
Holders of Class A21 Interests shall be deemed to have ratified and approved the
Second Amended and Restated Stock Option Plan. Additionally, upon entry of a
Confirmation Order, the Bankruptcy Court shall, consistent with Maryland and
federal law, be deemed to have approved the Second Amended and Restated Stock
Option Plan (including the increase in the number of shares of Common Stock with
respect to which options may be granted as provided for therein) on behalf of
CMI's shareholders and in satisfaction of Section 422 of the Internal Revenue
Code. Following the Effective Date, the Board of Directors of Reorganized CMI
may further amend or modify the Second Amended and Restated Stock Option Plan in
accordance with the terms thereof and any such further amendment or modification
shall not require amendment of this Plan. The Second Amended and Restated Stock
Option Plan amends CMI's Amended and Restated Stock Option Plan for Key
Employees to, among other matters, provide for an increase in the number of
shares of CMI Common Stock with respect to which options may be granted and
address tax and securities law matters.

All other option plans in place prior to the Effective Date shall
remain in place after the Effective Date and Reorganized CMI shall continue to
honor such option plans.

X. CONFIRMATION AND EFFECTIVE DATE CONDITIONS

A. Conditions to Confirmation.

Confirmation of this Plan is conditioned upon satisfaction of the
applicable provisions of Section 1129 of the Bankruptcy Code and entry of a
Confirmation Order by the Bankruptcy Court in form and substance satisfactory to
the Debtors and the CMI Equity Committee. Among other things, the Confirmation
Order shall authorize and direct that the Debtors, Reorganized CMI, Reorganized
CMM and Reorganized Holdings take all actions necessary or appropriate to enter
into, implement and consummate the contracts, instruments, releases, leases,
indentures and other agreements or documents created in connection with or
contemplated by the Plan, including, but not limited to, those actions
contemplated by the provisions of this Plan set forth in Section XII hereof, and
shall provide that all New Securities to be issued to Holders of Claims and
Interests pursuant to the Plan and all securities issuable upon the conversion
of the New Securities are exempt from registration under federal and state
securities laws pursuant to Section 1145 of the Bankruptcy Code and that the
solicitation of Holders of CMI Common Stock, Series B Preferred Stock and Old
Senior Notes is exempt under Rule 14a-2(a)(4) of the proxy regulations under the
Securities Exchange Act of 1934.

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B. Conditions to Effective Date.

The Effective Date will not occur and the Plan will not be consummated
unless and until each of the following conditions has been satisfied or waived
by the Debtors and the CMI Equity Committee:

1. The Confirmation Order in form and substance satisfactory to the
Debtors and the CMI Equity Committee and entered by the Bankruptcy Court shall
not have been modified in any respect.

2. The Recapitalization Financing shall be funded in accordance with
the terms of this Plan and the sale of the CMBS Sale Portfolio shall have been
completed.

3. All other actions and documents necessary to implement the
transactions contemplated by this Plan on or before the Effective Date shall
have been effected or executed.

XI. EFFECTS OF PLAN CONFIRMATION

A. Discharge of Debtors and Injunction.

Except as otherwise provided in the Plan or the Confirmation Order: (i)
on the Effective Date, the Debtors shall be deemed discharged and released to
the fullest extent permitted by Section 1141 of the Bankruptcy Code from all
Claims and Interests, including, but not limited to, demands, liabilities,
Claims and Interests that arose before the Effective Date and all debts of the
kind specified in Sections 502(g), 502(h) or 502(i) of the Bankruptcy Code,
whether or not (a) a proof of Claim or proof of Interest based on such Claim,
debt or Interest is Filed or deemed Filed pursuant to Section 501 of the
Bankruptcy Code, (b) a Claim or Interest based on such Claim, debt or Interest
is allowed pursuant to Section 502 of the Bankruptcy Code, or (c) the Holder of
a Claim or Interest based on such Claim, debt or Interest has accepted the Plan;
and (ii) all Persons shall be precluded from asserting against Reorganized CMI,
Reorganized CMM and Reorganized Holdings, their respective successors, or their
respective assets or properties any other or further Claims or Interests based
upon any act or omission, transaction, or other activity of any kind or nature
that occurred prior to the Effective Date. Except as otherwise provided in the
Plan, the Confirmation Order shall act as a discharge of any and all Claims
against and all debts and liabilities of the Debtors, as provided in Sections
524 and 1141 of the Bankruptcy Code, and such discharge shall void any judgment
against the Debtors at any time obtained to the extent that it relates to a
Claim discharged.

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Holdings, or their respective successors or their respective properties; (iii)
creating, perfecting or enforcing any lien or encumbrance against the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings, or their respective
successors or their respective properties; and (iv) commencing or continuing any
action, in any manner, in any place that does not comply with or is inconsistent
with the provisions of the Plan or the Confirmation Order. Any Person, including
but not limited to the Debtors, Reorganized CMI, Reorganized CMM or Reorganized
Holdings, injured by any willful violation of such injunction shall recover
actual damages, including costs and attorneys' fees, and, in appropriate
circumstances, may recover punitive damages, from the willful violator.

B. Limitation of Liability.

None of the Debtors, Reorganized CMI, Reorganized CMM or Reorganized
Holdings, the members of the Committees, the Indenture Trustee, or any of their
respective employees, officers, directors, agents, or representatives, or any
professional persons employed by any of them (including, without limitation,
their respective Designated Professionals), shall have any responsibility, or
have or incur any liability, to any Person whatsoever (i) for any matter
expressly approved or directed by the Confirmation Order or (ii) under any
theory of liability (except for any claim based upon willful misconduct or gross
negligence) for any act taken or omission made in good faith directly related to
formulating, implementing, confirming, or consummating the Plan, the Disclosure
Statement, or any contract, instrument, release or other agreement or document
created in connection with or contemplated by the Plan; provided, that nothing
in this Section XI.B shall limit the liability of any Person for breach of any
express obligation it has under the terms of this Plan, or any documents
executed in connection therewith or pursuant thereto, or under any other
agreement or document entered into by such Person in accordance with or pursuant
to the terms of this Plan (except to the extent expressly provided in the
Confirmation Order) or for any breach of a duty of care owed to any other Person
occurring after the Effective Date.

C. Releases.

On the Effective Date, each of the Debtors shall release
unconditionally, and hereby is deemed to release unconditionally (i) each of the
Debtors' then-current and former officers, directors, shareholders, employees,
consultants, attorneys, accountants, financial advisors and other
representatives (solely in their capacities as such) (collectively, the "Debtor
Releasees") and (ii) the Committees and, solely in their capacity as members or
representatives of the Committees, each member, consultant, attorney,
accountant, financial advisor or other representative of the Committees
(collectively, the "Committee Releasees") from any and all claims, obligations,
suits, judgments, damages, rights, causes of action and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, based in whole or in part upon any act or omission,
transaction, event or other occurrence taking place on or prior to the Effective
Date in any way relating to the Reorganization Cases, the Plan or the Disclosure
Statement.

On the Effective Date, each Holder of a Claim or Interest shall be
deemed to have unconditionally released the Debtor Releasees and the Committee
Releasees from any and all claims, obligations, suits, judgments, damages,
rights, causes of action and liabilities whatsoever

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<PAGE>

which any such holder may be entitled to assert, whether known or unknown,
foreseen or unforeseen, existing or hereafter arising, in law, equity or
otherwise, based in whole or in part upon any act or omission, transaction,
event or other occurrence taking place on or prior to the Effective Date in any
way relating to CMI, CMM and/or Holdings, the Debtors, the Reorganization Cases,
the Plan or the Disclosure Statement, excepting, however, from such release any
obligation owing to a Holder of an Allowed Claim or Allowed Interest provided
for in this Plan or the Confirmation Order.

D. Indemnification.

The obligations of the Debtors as of the Petition Date to indemnify
their present and former directors or officers, respectively, against any
obligations pursuant to the Debtors' articles of incorporation, by-laws,
applicable state law or specific agreement or resolution, or any combination of
the foregoing, shall survive confirmation of the Plan, remain unaffected
thereby, be assumed by Reorganized CMI, Reorganized CMM or Reorganized Holdings,
as the case may be, and not be discharged. The Debtors shall fully indemnify,
and Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may
be, shall assume the Debtors' obligations to indemnify, any person by reason of
the fact that he or she is or was serving as a director, officer, employee,
agent, professional, member, or other authorized representative (in each case,
as applicable) of any of the Debtors (collectively, the "Indemnitees") against
any claims, liabilities, actions, suits, damages, fines, judgments or expenses
(including reasonable attorneys' fees and expenses), arising during the course
of, or otherwise in connection with or in any way related to, the negotiation,
preparation, formulation, solicitation, dissemination, implementation,
confirmation and consummation of the Plan and the transactions contemplated
thereby and the Disclosure Statement in support thereof, provided, however, that
the foregoing indemnification shall not apply to any liabilities arising from
the gross negligence or willful misconduct of any Indemnitee. If any claim,
action or proceeding is brought or asserted against an Indemnitee in respect of
which indemnity may be sought from Reorganized CMI, Reorganized CMM or
Reorganized Holdings, the Indemnitee shall promptly notify Reorganized CMI, in
writing and, in any such event, Reorganized CMI shall assume the defense thereof
including the employment of counsel reasonably satisfactory to the Indemnitee,
and the payment of all expenses of such Indemnitee. The Indemnitee shall have
the right to employ separate counsel in any such claim, action or proceeding and
to participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Indemnitee unless (a) Reorganized CMI has agreed
to pay the fees and expenses of such counsel, or (b) Reorganized CMI shall have
failed to assume promptly the defense of such claim, action or proceeding or to
employ counsel reasonably satisfactory to the Indemnitee in any such claim
action or proceeding, or (c) the named parties in any such claim, action or
proceeding (including any impleaded parties) include both the Indemnitee and
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be,
and the Indemnitee believes, in the exercise of its business judgment and in the
opinion of its legal counsel, reasonably satisfactory to Reorganized CMI, that
the joint representation of Reorganized CMI, Reorganized CMM or Reorganized
Holdings, as the case may be, and the Indemnitee will likely result in a
conflict of interest (in which case, if the Indemnitee notifies Reorganized CMI
in writing that it elects to employ separate counsel at the expense of
Reorganized CMI, Reorganized CMI shall not have the right to assume the defense
of such action or proceeding on behalf of the Indemnitee). In addition, neither
Reorganized CMI, nor Reorganized CMM nor Reorganized Holdings shall effect any
settlement

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<PAGE>

or release from liability in connection with any matter for which the Indemnitee
would have the right to indemnification from Reorganized CMI, Reorganized CMM or
Reorganized Holdings unless such settlement contains a full and unconditional
release of the Indemnitee, or a release of the Indemnitee reasonably
satisfactory in form and substance to the Indemnitee.

E. Vesting of Assets.

Except as otherwise provided in the Plan or the Confirmation Order, on
the Effective Date, all property of CMI's Estate shall vest in Reorganized CMI
and all property of CMM's Estate shall vest in Reorganized CMM and all property
of Holdings' estate shall vest in Reorganized Holdings, all free and clear of
all Claims, liens, encumbrances and Interests of Holders of Claims and Holders
of Old Securities. From and after the Effective Date, Reorganized CMI,
Reorganized CMM and Reorganized Holdings may operate their business and use,
acquire and dispose of property and settle and compromise claims or interests
arising on or after the Effective Date without supervision by the Bankruptcy
Court and free of any restrictions of the Bankruptcy Code, the Bankruptcy Rules
or the Local Bankruptcy Rules, other than those restrictions expressly imposed
by the Plan or the Confirmation Order.

F. Preservation of Causes of Action.

Except as otherwise provided herein, or in any contract, instrument,
release or other agreement entered into in connection with or pursuant to the
Plan, Reorganized CMI, Reorganized CMM and Reorganized Holdings shall retain
(and may enforce) any claims, rights and causes of action that the Debtors or
the Estates may hold against any Person, including, but not limited to, any
claims, rights or causes of action under Sections 544 through 550 of the
Bankruptcy Code or any similar provisions of state law, or any other statute or
legal theory.

G. Retention of Bankruptcy Court Jurisdiction.

To the maximum extent permitted by the Bankruptcy Code and other
applicable law, the Bankruptcy Court shall have jurisdiction of all matters
arising out of, and related to, the Reorganization Cases and the Plan pursuant
to, and for the purpose of, Sections 105(a) and 1142 of the Bankruptcy Code,
including, without limitation, jurisdiction to:

1. Allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim or Interest,
including the resolution of any request for payment of any Administrative Claim,
the resolution of any objections to the allowance or priority of Claims or
Interests and the resolution of any dispute as to the treatment necessary to
Reinstate a Claim pursuant to the Plan;

2. Grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or the
Plan, for periods ending before the Effective Date;

3. Resolve any matters related to the assumption or rejection of any
executory contract or unexpired lease to which any of the Debtors is a party or
with respect to which any of the

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Debtors may be liable, and to hear, determine and, if necessary, liquidate any
Claims arising therefrom;

4. Ensure that distributions to Holders of Allowed Claims or Allowed
Interests are accomplished pursuant to the provisions of the Plan;

5. Decide or resolve any motions, adversary proceedings, contested or
litigated matters and any other matters and grant or deny any applications
involving the Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings
that may be pending on the Effective Date;

6. Enter such Orders as may be necessary or appropriate to implement or
consummate the provisions of the Plan and all contracts, instruments, releases,
indentures and other agreements or documents created in connection with or
pursuant to the Plan, the Disclosure Statement or the Confirmation Order, except
as otherwise provided herein;

7. Resolve any cases, controversies, suits or disputes that may arise
in connection with the consummation, interpretation or enforcement of the Plan
or the Confirmation Order, including the release and injunction provisions set
forth in and contemplated by the Plan and the Confirmation Order, or any
entity's rights arising under or obligations incurred in connection with this
Plan or the Confirmation Order;

8. Enter such Orders as may be necessary or appropriate to correct any
defect, cure any omission, or reconcile any inconsistency in this Plan or the
Confirmation Order as may be necessary to carry out the purposes and intent of
this Plan;

9. Enter such Orders as may be necessary or appropriate to enforce,
implement or interpret the terms and conditions of this Plan and resolve any
objections filed with respect to any actions proposed to be taken in connection
with or pursuant to the provisions of this Plan;

10. Enter such Orders as may be necessary or appropriate to approve
agreements, settlements or compromises in connection with matters pending on the
Effective Date or arising thereafter in connection with implementation of
provisions of the Plan;

11. Determine all adversary proceedings and contested matters to
recover or enforce rights with respect to property of any of the Debtors or
their Estates or to obtain other relief relating to causes of actions or claims
under the Bankruptcy Code or other applicable law including, but not limited to,
any actions brought under Sections 541 through 553 of the Bankruptcy Code;

12. Determine matters concerning state, local or federal taxes pursuant
to Sections 346, 505, 525, 1146 and any other tax-related provisions of the
Bankruptcy Code;

13. Enter such Orders as may be necessary or appropriate to enforce and
interpret the provisions of the Confirmation Order;

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<PAGE>

Bankruptcy Code or modify the Disclosure Statement, the Confirmation Order or
any contract, instrument, release, indenture or other agreement or document
created in connection with or pursuant to the Plan, the Disclosure Statement or
the Confirmation Order, or remedy any defect or omission or reconcile any
inconsistency in any Bankruptcy Court Order, this Plan, the Disclosure
Statement, the Confirmation Order or any contract, instrument, release,
indenture or other agreement or document created in connection with or pursuant
to the Plan, the Disclosure Statement or the Confirmation Order, in such manner
as may be necessary or appropriate to consummate this Plan, to the extent
authorized by the Bankruptcy Code;

15. Issue injunctions, enter and implement other Orders or take such
other actions as may be necessary or appropriate to restrain interference by any
entity with consummation, implementation or enforcement of the Plan or the
Confirmation Order;

16. Enter and implement such Orders as are necessary or appropriate if
the Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated;

17. Except as otherwise provided in this Plan, or with respect to
specific matters, in the Confirmation Order or any other Order entered in
connection with the Reorganization Cases, determine any other matters that may
arise in connection with or relating to the Plan, the Disclosure Statement, the
Confirmation Order or any contract, instrument, release, indenture or other
agreement or document created in connection with or pursuant to this Plan, the
Disclosure Statement or the Confirmation Order; and

18. Enter an Order or Orders closing the Reorganization Cases.

H. Failure of Bankruptcy Court to Exercise Jurisdiction.

If the Bankruptcy Court abstains from exercising or declines to
exercise jurisdiction, or is otherwise without jurisdiction over any matter
arising out of the Reorganization Cases, including the matters set forth in
Section XI.G above, Section XI.G shall not prohibit or limit the exercise of
jurisdiction by any other court having competent jurisdiction with respect to
such matter.

I. Committees.

On the Effective Date, all Committees, shall be dissolved and the
members of such Committees and their professionals shall be released and
discharged from all further rights and duties arising from or related to the
Reorganization Cases. The professionals retained by such Committees and the
members thereof shall not be entitled to compensation or reimbursement of
expenses incurred for services rendered after the Effective Date other than for
services rendered in connection with any application for allowance of
compensation and reimbursement of expenses pending as of, or timely Filed after,
the Effective Date.

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<PAGE>

XII. MISCELLANEOUS PROVISIONS

A. Final Order.

Any requirement in this Plan that an Order be a Final Order may be
waived by the Debtors (or Reorganized Debtors, if applicable); provided, that
nothing contained herein or elsewhere in this Plan shall prejudice the right of
any party in interest to seek a stay pending appeal with respect to such order.

B. Modification of the Plan.

If, after receiving sufficient acceptances but prior to Confirmation of
the Plan, the Debtors and the CMI Equity Committee seek to modify the Plan, the
Debtors and the CMI Equity Committee can use such previously solicited
acceptances only to the extent permitted by applicable law.

The Debtors and the CMI Equity Committee reserve the right after the
Confirmation Date and before the Effective Date to modify the terms of the Plan
or waive any conditions to the effectiveness thereof if and to the extent the
Debtors and the CMI Equity Committee determine that such modifications or
waivers are necessary or desirable to consummate the Plan. The Debtors will give
such Holders of Claims and Interests notice of such modifications or waivers as
may be required by applicable law and the Bankruptcy Court, and any such
modifications shall be subject to the approval of the Bankruptcy Court to the
extent required by, and in accordance with, Section 1127 of the Bankruptcy Code.

The CMI Equity Committee will join in modifications proposed by the
Debtors in accordance with the foregoing in the exercise of such Committee's
reasonable discretion.

C. Revocation of the Plan.

The Debtors reserve the right to revoke or withdraw the Plan prior to
the Confirmation Date. If the Debtors revoke or withdraw the Plan, or if
Confirmation does not occur, then the Plan shall be null and void, and all of
the Debtors' respective obligations with respect to the Claims and Interests
shall remain unchanged and nothing contained herein or in the Disclosure
Statement shall be deemed an admission or statement against interest or to
constitute a waiver or release of any claims by or against either Debtor or any
other Person or to prejudice in any manner the rights of either Debtor or any
Person in any further proceedings involving either Debtor or any Person.

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<PAGE>

D. Application of Section 1145 of the Bankruptcy Code and Federal Securities
Laws.

All New Securities to be issued to Holders of Claims and Interests
pursuant to the Plan, and all securities issuable upon the conversion of any of
the New Securities shall be exempt from registration under federal and state
securities laws pursuant to Section 1145 of the Bankruptcy Code. The
solicitation of Holders of CMI Common Stock, Series B Preferred Stock and Old
Senior Notes shall be exempt under Rule 14a-2(a)(4) of the proxy regulations
under the Securities Exchange Act of 1934.

E. Application of Section 1146(c) of the Bankruptcy Code.

The implementation and enforcement of any provisions of the Plan
transferring assets or property, including but not limited to sales of the
commercial mortgage-backed securities and any other property in the CMBS Sale
Portfolio, and the making, delivery or recording of any "instrument of transfer"
in connection with or pursuant to the Plan, shall not be taxed under any law
imposing a stamp tax, transfer tax or a similar tax pursuant to Section 1146(c)
of the Bankruptcy Code.

F. Successors and Assigns.

The rights, benefits and obligations of any Person named or referred to
in the Plan shall be binding on, and shall inure to the benefit of, any heir,
executor, trustee, administrator, successor or assign of such Person.

G. Saturday, Sunday or Legal Holiday.

If any payment or act under the Plan is required to be made or
performed on a date that is not a Business Day, then the making of such payment
or the performance of such act may be completed on the next succeeding Business
Day, but shall be deemed to have been completed as of the required date.

H. Committee Action.

With respect to the action of any of the committees under this plan,
any such action shall be duly authorized by majority vote of committee members
at a meeting, in person or by telephone, at which a quorum of such committee is
present or by majority consent of the members of such committee then serving.

I. Post-effective Date Effect of Evidences of Claims or Interests.

Except as otherwise specified herein, notes, bonds, stock certificates
and other evidences of Claims against or Interests in the Debtors, and all
Instruments of the Debtors (in either case, other than those executed and
delivered as contemplated hereby in connection with the consummation of the
Plan), shall, effective upon the Effective Date, represent only the right to
participate in the distributions contemplated by the Plan.

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<PAGE>

J. Governing Law.

Unless a rule of law or procedure is supplied by (i) federal law
(including the Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy
Rules), (ii) an express choice of law provision in any agreement, contract,
instrument, or document provided for, or executed in connection with, the Plan,
or (iii) applicable non-bankruptcy law, the rights and obligations arising under
the Plan and any agreements, contracts, documents, and instruments executed in
connection with or pursuant to the Plan shall be governed by, and construed and
enforced in accordance with, the laws of the State of Maryland without giving
effect to the principles of conflict of laws thereof.

K. No Liability for Solicitation or Participation.

As specified in Section 1125 (e) of the Bankruptcy Code, Persons that
solicit acceptances or rejections of the Plan and/or that participate in the
offer, issuance, sale, or purchase of securities offered or sold under or in
connection with the Plan, in good faith and in compliance with the applicable
provisions of the Bankruptcy Code, shall not be liable, on account of such
solicitation or participation, for violation of any applicable law, rule, or
regulation governing the solicitation of acceptances or rejections of the Plan
or the offer, issuance, sale, or purchase of securities.

L. No Admissions or Waiver of Objections.

Notwithstanding anything herein to the contrary, if the Effective Date
does not occur, nothing contained in the Plan shall be deemed as an admission by
the Debtors, the CMI Equity Committee or any other party with respect to any
matter set forth herein, including, without limitation, liability on any Claim
or the propriety of any Claims classification. Neither the Debtors nor the CMI
Equity Committee are bound by any statements herein or in the Disclosure
Statement as judicial admissions.

DATED: December 23, 1999

CRIIMI MAE Inc.
a Maryland corporation

By: /s/
--------------------------------------
Name: William B. Dockser
Title: Chairman

CRIIMI MAE Management, Inc.
a Maryland corporation

By: /s/
--------------------------------------
Name: William B. Dockser
Title: Chairman

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<PAGE>

CRIIMI MAE Holdings II, L.P.
a Delaware Limited Partnership

By: CRIIMI MAE Inc.
its General Partner

By: /s/
-----------------------------------------
Name: William B. Dockser
Title: Chairman

VENABLE, BAETJER AND HOWARD, LLP AKIN, GUMP, STRAUSS HAUER
& FELD L.L.P.

By: /s/ By: /s/
------------------------------ -----------------------------------------
Richard L. Wasserman Stanley J. Samorajczyk, P.C.
Gregory A. Cross Michael S. Stamer
1800 Mercantile Bank and Trust 1333 New Hampshire Ave., NW
Building Washington, D.C. 20036
Two Hopkins Plaza (202) 887-4000
Baltimore, Maryland 21201
(410) 244-7400

SHULMAN, ROGERS, GANDAL,
PORDY & ECKER, P.A.

By: /s/
------------------------------
Morton A. Faller
11921 Rockville Pike
Third Floor
Rockville, MD 20852-2753
(301) 231-0928

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<PAGE>

CO-PROPONENT:
Official Committee of Equity Security Holders
of CRIIMI MAE Inc.

By: /s/
------------------------------------
Name: Michael F. Wurst
Title: Co-Chairman

COVINGTON & BURLING

By: /s/
------------------------------------
Michael St. Patrick Baxter
Dennis B. Auerbach
1201 Pennsylvania Ave., NW
Washington, D.C. 20044
(202) 662-6000

Attorneys for the Official Committee
of Equity Security Holders of CRIIMI MAE Inc.

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<PAGE>

EXHIBIT 1

TERMS OF CHAPTER 11 PLAN
TREATMENT OF MERRILL LYNCH
MORTGAGE CAPITAL INC. AND
GERMAN AMERICAN CAPITAL CORPORATION

CRIIMI MAE Inc. ("CMI") and Merrill Lynch Mortgage Capital Inc. and
German American Capital Corporation ("MLMCI/GACC"), agree to the following terms
and conditions to be included in an Amended Plan of Reorganization to be filed
by CMI. This Term Sheet is subject to the filing of a plan of reorganization and
disclosure statement consistent with the terms and conditions set forth herein
and to agreement upon the form and substance of the New Secured Debt Documents
(as hereinafter defined).

OVERVIEW: Subject to the conditions outlined in this Term
Sheet, MLMCI/GACC and CMI will jointly support an
Amended Plan of Reorganization filed by CMI, CRIIMI
MAE Management, Inc., CRIIMI MAE Holdings II, L.P.
(together, the Debtors) (the "Amended Plan")
providing for MLMCI/GACC to receive, in respect of
the Class A3 (GACC) and Class A5 (MLMCI) Claims (the
"Claims"), (a) an up-front cash payment in reduction
of the Claims on the effective date of the Amended
Plan (the "Effective Date"), as described in the
section of this Term Sheet captioned "Initial
Paydown"; (b) treatment of the Claims as described in
this Term Sheet; and (c) the receipt by MLMCI/GACC,
on the Effective Date, of new secured debt of CMI
(the "New Secured Debt") on the terms and conditions
described in this Term Sheet. The Secured Notes and
other documents that will evidence and secure the New
Secured Debt are sometimes referred to in this Term
Sheet, collectively, as the "New Secured Debt
Documents."

INITIAL PAYDOWN: $100 million in immediately available funds, payable
to MLMCI and GACC on the Effective Date in reduction
of the Claims, PARI PASSU in proportion to the
respective allowed amounts of such Claims plus any
accrued but unpaid interest owing to MLMCI/GACC
(accruing at the contract non-default rate) (the
"Initial Paydown"). [Assumes that GACC will have been
paid in full on its non-CBO Claim at the specified
allocated debt amount (accruing interest at the
contract non-default rate).]

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<PAGE>

BORROWER: CMI or a subsidiary thereof reasonably acceptable to
MLMCI/GACC. The New Secured Debt will be a full
recourse obligation of CMI.

PRINCIPAL The original principal amount of the New Secured
AMOUNT: Debt will be equal to (a) the allowed secured Claims
of MLMCI and GACC, which will be equal to the
aggregate outstanding principal amount of the MLMCI
and GACC debt, plus any accrued and unpaid interest
thereon, as of the date immediately preceding the
Effective Date, without offset or reduction for any
reason (including, without limitation, post-petition
interest), MINUS (b) $100 million, MINUS (c) any
additional principal paydown paid on the Effective
Date in accordance with the Amended Plan.

COLLATERAL: The New Secured Debt will be secured by
first-priority liens and security interests in the
assets listed on the attached Schedule A which shall
include the CCC-rated and unrated classes of "CBO
II". The assets identified on Schedule A are
sometimes referred to in this Term Sheet,
collectively, as the "Collateral". The Collateral
will not be encumbered by or otherwise subject to
liens or security interests in favor of any creditor
other than MLMCI/GACC.

In addition, the Amended Plan will provide, in a
manner acceptable to MLMCI/GACC and their respective
counsel, that in the event MLMCI/GACC become entitled
under the terms of the New Secured Debt Documents to
foreclose upon, sell or otherwise realize upon the
Collateral or any portion thereof upon the occurrence
of the scheduled Maturity Date or any accelerated
maturity following an Event of Default (as such term
is defined in the New Secured Debt Documents), MLMCI
and GACC will also be entitled to sell or transfer
the assets listed on Schedule B (CBO I and Nomura
Bonds) (collectively the "CBO I/Nomura Assets");
provided, however, that any net sales price realized
from the sale of the CBO I/Nomura Assets shall be
remitted to CMI or its designee. The New Secured Debt
Documents will also contain provisions acceptable to
MLMCI/GACC and their respective counsel prohibiting
CMI, prior to the New Secured Debt having been paid
in full from selling or pledging

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<PAGE>

the CBO I/Nomura Assets if the sale or pledge would
result in (i) an adverse change to the tax treatment
of, or otherwise materially and adversely affect, the
Collateral or the CBO I/Nomura Assets or (ii) a
transfer to anyone other than MLMCI/GACC or their
designee of the special servicing rights in
connection with the Collateral.

MATURITY DATE: Business Day immediately preceding the fourth (4th)
anniversary of the Effective Date.

FACILITY FEE: One and one-half percent (1 1/2%) of the original
principal amount of the New SecurED Debt, such
Facility Fee to be paid on the Effective Date of the
Amended Plan.

INTEREST RATE: 30-day LIBOR, plus 325 basis points (3.25%), payable
monthly in arrears. The New Secured Debt Documents
will also contain customary "default rate", "late
charge" and "LIBOR breakage" provisions.

SCHEDULED In addition to interest on the New Secured Debt
PRINCIPAL at the floating rate specified in the section of this
PAYDOWN: Term Sheet captioned "Interest Rate" (the
"Interest"), MLMCI/GACC will also be entitled to
receive, concurrently with each monthly payment of
interest required under the New Secured Debt
Documents, a principal amortization payment in an
amount sufficient, as of the date of such payment, to
amortize the principal amount of the New Secured Debt
then outstanding over the period commencing on the
date of such payment and ending on the fifteenth
anniversary of the Effective Date (the "Scheduled
Principal Paydown"). The combined payment of
Scheduled Principal Paydown and Interest required to
be made on each monthly payment date under the New
Secured Debt Documents is sometimes referred to in
this Term Sheet as the "Required Payment."

CASH A cash management account, in the name of CMI (the
MANAGEMENT "Cash Management Account"), will be established on
ACCOUNT: the Effective Date at a bank mutually acceptable to
MLMCI/GACC and CMI. Other than as set forth in this
Section, all payments received by CMI after the
Effective Date relating to any assets owned by

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<PAGE>

CMI on the Effective Date ("Monthly Cash Flow") will
be deposited directly into the Cash Management
Account; PROVIDED, HOWEVER, that the income, expenses
and assets of CRIIMI MAE Services Limited Partnership
("CMSLP") shall be retained by CMSLP. All payments
relating to the CMM 1998-1 Bonds (CMO IV) shall, if
so required by the secured creditor to whom such
Bonds are pledged as collateral, be excluded from
Monthly Cash Flow and will not be deposited into the
Cash Management Account. Except as otherwise provided
in the section of this Term Sheet entitled
"Transition Events," CMI may pay from the Cash
Management Account (i) all general operating and
administrative expenses for CMI, including
affiliates, to the extent such expenses do not exceed
the total as set forth in an operating budget
approved annually (or as otherwise modified with the
consent of MLMCI/GACC) by MLMCI/GACC with respect to
the fiscal year in question, such approval not to be
unreasonably withheld (PROVIDED, HOWEVER, that all
income retained by CMSLP shall be applied toward
payment of CMSLP expenses before any of such expenses
are charged to the Cash Management Account, and
PROVIDED FURTHER, that the New Secured Debt Documents
will contain provisions acceptable to MLMCI/GACC
prohibiting income and assets of CMI from being
redirected to CMSLP); (ii) interest owing on notes
issued to CMI Unsecured Creditors (the "Unsecured
Creditors") pursuant to the Amended Plan; (iii) cash
dividends on Class B, C, D, and F Preferred Stock;
(iv) cash dividends on any Preferred Stock issued to
satisfy REIT distribution requirements (the "PIK
Dividend"); (v) cash dividends owing to any new
equity investor; (vi) cash dividends on all
outstanding shares of CMI Common Stock (PROVIDED,
HOWEVER, that the amount of such cash dividends paid
in any taxable year of CMI will not exceed 10% of the
amount of the cash dividends that would otherwise be
payable by CMI to its Common stockholders in the
absence of this limitation); and (vii) payments such
as excise taxes necessary to maintain CMI's REIT
status (collectively, the "Monthly Cash Payments").
The total amount of the Monthly Cash Payments during
the first 24 months after the Effective Date will be
limited to the extent necessary to permit CMI to pay
MLMCI/GACC from the Cash Management Account (x) an
Accelerated

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<PAGE>

Principal Paydown (as defined herein) equivalent to
at least $25 million in the first 12 months after the
Effective Date, and (y) a total Accelerated Principal
Paydown of $50 million by the end of the
twenty-fourth (24th) month after the Effective Date.
The total amount of the Monthly Cash Payments during
the 25th through 48th months after the Effective Date
will be limited to the extent necessary to permit CMI
to pay MLMCI/GACC from the CMI Collection Account and
the Cash Management Account monthly principal
amortization payments in amounts sufficient to
amortize the remaining principal amount of the New
Secured Debt on the schedule contemplated by the last
paragraph of the section of this Term Sheet captioned
"Transition Events". The limitations on Monthly Cash
Payments set forth in the preceding two sentences are
referred to hereinafter as the "Payment Cap".

A cash collateral account, in the name of CMI but
under the dominion and control of MLMCI/GACC (the
"CMI Collection Account"), will be established on the
Effective Date at a bank mutually acceptable to CMI
and MLMCI/GACC. All cash flow received in respect of
the Collateral (including, without limitation,
principal and interest payments on the CMBS assets
included in the Collateral) will be deposited by the
party receiving such cash flow into the CMI
Collection Account. Pursuant to the Amended Plan,
MLMCI/GACC will be granted a perfected first priority
security interest in the CMI Collection Account.
MLMCI/GAAC shall be paid the Required Payment from
the CMI Collection Account. In the event the funds
available in the Cash Management Account are
insufficient to enable CMI to make all Monthly Cash
Payments permitted or required to be made by CMI in
respect of any month, subject to the Payment Cap, and
to maintain a minimum balance in the Cash Management
Account as provided in the section of this Term Sheet
labeled "Cash Sweep", MLMCI/GACC will cause funds in
the amount of the shortfall to be transferred from
the CMI Collection Account to the Cash Management
Account. CMI will earn interest on all monies
deposited into the CMI Collection Account.

Notwithstanding anything appearing to the contrary in

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<PAGE>

either of the two preceding paragraphs of this
section, (i) only those funds, if any, remaining in
the CMI Collection Account after payment of the
Required Payment due on the monthly payment date
occurring at the end of the related collection period
will be transferred from the CMI Collection Account
to the Cash Management Account; (ii) no cash
dividends will be paid on any Preferred or Common
Stock at any time when the funds available in the CMI
Collection Account (taking account of any funds
transferred from the Cash Management Account to the
CMI Collection Account in accordance with clause
(iii) below) are insufficient to pay MLMCI/GACC the
Required Payment next becoming due; (iii) if the
amount of funds available in the CMI Collection
Account on the monthly payment date at the end of the
related collection period is less than the amount of
the Required Payment due on such monthly payment
date, funds in the amount of the shortfall which
would otherwise have been available to pay cash
dividends to Preferred or Common Stockholders will be
transferred from the Cash Management Account to the
CMI Collection Account and applied toward such
Required Payment; and (iv) nothing in this paragraph
or elsewhere in this Term Sheet shall be interpreted
to limit CMI's obligation to pay any Required Payment
on the date when due, to subordinate MLMCI/GACC's
right to receive any Required Payment to any other
CMI creditor's right to receive any payment owing to
such creditor, or to limit CMI's right or ability to
transfer additional funds from the Cash Management
Account, if necessary, to pay the Required Payment.

CASH SWEEP: After the Effective Date of the Amended Plan,
MLMCI/GACC may begin making cash sweeps of the Cash
Management Account and the CMI Collection Account on
the last day of each calendar month (the "Cash
Sweep"); PROVIDED, HOWEVER, that so long as no Event
of Default under the New Secured Debt Documents shall
have occurred and be continuing, the Cash Sweep shall
not reduce the amount remaining in the Cash
Management Account below the sum of (a) $10 million
(subject to downward revision, but not below $5
million, based on MLMCI/GACC financial due
diligence), plus (b) the amount determined by
MLMCI/GACC in the exercise of their good faith

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<PAGE>

business judgment to be the amount by which (i) the
Monthly Cash Payments to be made by CMI over the next
succeeding month, subject to the Payment Cap, will
exceed (ii) the funds that will be deposited in the
Cash Management Account over the same month. The net
proceeds of the Cash Sweep shall be paid to
MLMCI/GACC and applied to reduce the principal amount
of the New Secured Debt (the "Accelerated Principal
Paydown").

Subject to the provisions set forth in the section of
this Term Sheet captioned "Transition Events", when
MLMCI/GACC have received a paydown of the original
principal amount of the New Secured Debt totalling
$150 million (including the $100 million initial
principal paydown and any other principal paydowns
referred to in the section of this Term Sheet
captioned "Principal Amount") (the "Required
Principal Paydown"), the Cash Sweep will terminate
and all monies in the CMI Collection Account will be
paid to CMI on a monthly basis, but only if and to
the extent that MLMCI/GACC have received the full
Revised Payment (and the full Required Payment) for
the month in question.

TRANSITION EVENTS: If MLMCI/GACC have not been paid the Required
Principal Paydown prior to the end of the
twenty-fourth (24th) month after the Effective Date,
then, notwithstanding anything appearing to the
contrary in the section of this Term Sheet captioned
"Cash Management Account", CMI may not pay any
Preferred or Common Stock cash dividends (other than
to a new equity investor, to the extent of the lesser
of 12% per annum and $5 million, or the PIK Dividend,
subject in each case to the Payment Cap), until
MLMCI/GACC have received the Required Principal
Paydown.

If at any time realized losses on the Collateral
(including losses by reason of appraisal reduction,
as such term is defined in the underlying pooling and
servicing agreement or trust indenture with respect
to the affected CMBS asset or, if no such definition
is provided, as such term is defined in the New
Secured Debt Documents) exceed a loss threshold to be
specified in the New Secured Debt Documents (the
"Loss Threshold Amount"), then, notwithstanding

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<PAGE>

anything appearing to the contrary in the section of
this Term Sheet captioned "Cash Management Account",
CMI may not pay any Preferred or Common Stock cash
dividends (other than the PIK Dividend, subject to
the Payment Cap) until (i) realized losses (including
losses by reason of appraisal reduction) no longer
exceed the Loss Threshold Amount, or (ii) MLMCI/GACC
have been paid from extrinsic sources (I.E., from
outside equity investment or from funds CMI would
otherwise be entitled under the New Secured Debt
Documents to dividend or distribute to its equity
securityholders, but not from the income from the
Collateral or other operating cash flow of CMI,
except to the extent that CMI would otherwise be
entitled to dividend or distribute such income or
cash flow to its equity securityholders) cash in the
amount by which realized losses (including losses by
reason of appraisal reduction, defined as aforesaid)
exceed the Loss Threshold Amount.

In the event the payment of cash dividends on the
Preferred and/or Common Stock is suspended in
accordance with the provisions of either of the two
preceding paragraphs, the applicable Payment Cap will
be deemed to have been reduced by the amount of such
cash dividends CMI would otherwise have been entitled
to pay until MLMCI/GACC have received the payment
provided for in those paragraphs.

If on any monthly payment date MLMCI/GACC do not
receive a payment at least equivalent to the Required
Payment due on such monthly payment date, an Event of
Default will occur under the New Secured Debt
Documents, in which case MLMCI/GACC, in addition to
any other contractual, legal and equitable remedies
they are entitled to exercise, will be entitled, at
their option, to resume or continue (as applicable)
the Cash Sweep (PROVIDED, HOWEVER, that the exercise
by MLMCI/GACC of their right to resume or continue
the Cash Sweep shall not constitute a waiver or cure
of the Event of Default).

After MLMCI/GACC have been paid the Required
Principal Paydown, MLMCI/GACC shall be paid, on each
monthly payment date during the remainder of the New
Secured Debt term, (i) Interest at the

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<PAGE>

applicable rate required under the New Secured Debt
Documents, plus (ii) a principal amortization payment
in an amount sufficient, as of the date of such
payment, to amortize the principal amount of the New
Secured Debt then outstanding over the period
commencing on the date of such payment and ending on
the thirteenth (13th) anniversary of the Effective
Date (the interest payment specified in clause (i)
and the principal payment described in clause (ii)
being referred to hereinafter, collectively, as the
"Revised Payment"), and if at any time MLMCI/GACC do
not receive the Revised Payment, the Cash Sweep will
resume until MLMCI/GACC have received payments
aggregating the same amounts that would have been
paid if all Revised Payments had been made in
accordance with this Term Sheet. Resumption of the
Cash Sweep by MLMCI/GACC upon their failure to
receive the Revised Payment will be in addition to,
and not in lieu of, the exercise by MLMCI/GACC of any
other contractual, legal or equitable remedies in the
event any Required Payment is not received when due.

LOAN EXTENSION: If CMI has not paid MLMCI/GACC the entire amount of
the New Secured Debt (i) within 24 months of the
Effective Date, CMI shall pay MLMCI/GACC an Extension
Fee equivalent to 1.5% of the remaining principal
balance of the New Secured Debt at the end of the
24th month after the Effective Date; (ii) within 30
months of the Effective Date, CMI shall pay
MLMCI/GACC an Extension Fee equivalent to 1.5% of the
remaining principal balance of the New Secured Debt
at the end of the 30th month after the Effective
Date; (iii) within 36 months of the Effective Date,
CMI shall pay MLMCI/GACC an Extension Fee equivalent
to 1.5% of the principal balance of the New Secured
Debt remaining at the end of the 36th month after the
Effective Date; and (iv) within 42 months of the
Effective Date, CMI shall pay MLMCI/GACC an Extension
Fee equivalent to 1.5% of the remaining principal
balance of the New Secured Debt at the end of the
42nd month after the Effective Date. Failure to pay
any Extension Fee on the date when due will
constitute an Event of Default under the New Secured
Debt Documents.

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<PAGE>

EQUITY INVESTMENT: Subject to the provisions of this paragraph, CMI
shall be entitled to utilize the proceeds of any
equity investments (including proceeds of sale of
assets purchased with proceeds of equity investments)
without restriction. If, however, there are realized
losses on the Collateral (including losses resulting
from appraisal reductions, as described in the second
paragraph of the section of this Term Sheet captioned
"Transition Events") in excess of the Loss Threshold
Amount and MLMCI/GAAC are not otherwise compensated
for such losses in the manner specified in the
section of this Term Sheet captioned "Transition
Events", CMI shall pay (i) 50% of the proceeds it
subsequently receives from any equity investment of
less than $50 million (including proceeds of sale of
assets purchased with the proceeds of such equity
investment) to reduce indebtedness and (ii) 75% of
the portion of any aggregate equity investment it
subsequently receives that exceeds $50 million
(including proceeds of sale of assets purchased with
the proceeds of such equity investment) to reduce
indebtedness. In addition, if CMI elects to use any
portion of the proceeds of an equity investment (or
any portion of the proceeds of sale of assets
purchased with the proceeds of such equity
investment) to reduce the principal amount of any
indebtedness, then the portion of the proceeds of
such equity investment that is used to reduce
indebtedness shall be allocated in a ratio no less
favorable to MLMCI/GACC than 67% to MLMCI/GACC and
33% to the Unsecured Creditors; PROVIDED, HOWEVER,
that CMI may use the first $27 million of proceeds of
any equity investment received prior to or concurrent
with the Effective Date to reduce its indebtedness to
any creditor without the restrictions set forth in
this Equity Investment paragraph (but subject,
nevertheless, to the restriction set forth in the
section of this Term Sheet captioned "Unsecured
Paydown"). The amounts paid to MLMCI/GACC and the
Unsecured Creditors shall be applied to reduce the
amount of outstanding principal of and accrued
interest on their respective indebtednesses.

UNSECURED Notwithstanding any other provision of this Term
PAYDOWN: Sheet permitting or authorizing CMI to utilize
certain funds to reduce the amount of principal
indebtedness

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<PAGE>

owing to the Unsecured Creditors, and in addition to
any other provision of this Term Sheet restricting
payments to the Unsecured Creditors, the New Secured
Debt Documents will require that, at such time as the
outstanding principal indebtedness owing to the
Unsecured Creditors has been reduced (from whatever
source of funds, including, by way of example only
and not by way of limitation, proceeds of equity
investments, proceeds of asset sales and cash flow
from operations) to or below $100 million, any funds
which CMI would otherwise have been permitted or
authorized to use to reduce the amount of principal
indebtedness owing to the Unsecured Creditors, and
which CMI in fact uses to reduce indebtedness, will
be allocated in a ratio no less favorable to
MLMCI/GACC than 67% to MLMCI/GACC and 33% to the
Unsecured Creditors.

BOARD: A majority of the Board of Directors of CMI, as of
the Effective Date, shall be newly-appointed
independent directors approved by MLMCI/GACC and the
Official Committee of Equity Security Holders if the
class(es) of CMI common stockholders vote, or are
deemed to have voted, in favor of the Amended Plan
and the Official Committee of Unsecured Creditors if
the class(es) of Unsecured Creditors vote in favor of
the Amended Plan (MLMCI/GACC and the Committee(s)
having approval rights as aforesaid being referred to
hereinafter as the "Approval Parties"); PROVIDED,
HOWEVER, that the Approval Parties' approval will not
be required with respect to those (and only those)
directors, if any, of the aforesaid majority who are
appointed by a new equity investor approved by
MLMCI/GACC.

OPTIONAL Prior to the Maturity Date, CMI may prepay the New
REDEMPTION: Secured Debt in whole or in part, without any penalty
or premium, except for payment of actual costs, if
any of breaking any LIBOR contracts.

MISCELLANEOUS: The New Secured Debt Documents will not contain any
mark to market provisions other than as set forth in
this Term Sheet.

CMI will be required under the New Secured Debt
Documents to deliver to MLMCI/GACC all publicly

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<PAGE>

filed financial information when and to the extent
same is available to the general public. In addition
to such public financial information, CMI will also
be required to provide financial information
including monthly reconciliation of balances,
principal and interest with respect to each CMBS
asset included in the Collateral, any servicing,
remittance and delinquency reports (in a format
reasonably acceptable to CMI), and such other
information as MLMCI/GACC may reasonably require.
MLMCI/GACC agrees to keep any non-public information
confidential.

CMI and MLMCI/GAAC will cooperate in good faith to
develop a fair and reasonable hedging program.

The New Secured Debt Documents will require CMI to
submit annual operating budgets, in form and level of
detail reasonably acceptable to MLMCI/GACC, to
MLMCI/GACC for review and approval.

The New Secured Debt Documents will provide for
events of default (including grace or cure periods,
where appropriate) customary for transactions of this
type.

The New Secured Debt Documents will contain
provisions intended to ensure that MLMCI/GACC will
obtain the substantive benefits of this Term Sheet by
prohibiting technical circumvention of the
requirement that certain cash flow and payments be
deposited in the Cash Management Account or the CMI
Collection Account (for example, by selling an asset
owned by CMI on the Effective Date and using the
proceeds to purchase a new asset the cash flow from
which would not otherwise be required to be deposited
into the Cash Management Account), and the
requirement that proceeds of equity investments be
applied in the prescribed manner (for example, by
using the proceeds of an equity investment to
purchase a new asset, reselling such asset and
applying the proceeds of such resale in a manner that
the proceeds of the equity investment itself could
not have been applied).

The scheduled maturity of any new notes issued to the
Unsecured Creditors will not be earlier than the
sixth (6th) anniversary of the Effective Date. The
New

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<PAGE>

Secured Debt Documents will require CMI to obtain the
approval of MLMCI/GACC of any modification of such
notes that would change the scheduled maturity
thereof to any earlier date.

If requested by MLMCI/GACC, the New Secured Debt may
be structured as a "repurchase agreement" consistent
with the provisions of this Term Sheet between CMI,
as seller, and MLMCI/GACC, as purchaser, with respect
to the CMBS that would otherwise constitute
Collateral, unless counsel for CMI and counsel for
MLMCI/GACC, acting reasonably and in good faith,
collectively determine that such structure would
materially and adversely affect CMI's REIT status or
have material and adverse consequences for CMI under
the Investment Company Act of 1940, as amended.

The MLMCI/GACC indebtedness shall be allowed pursuant
to the Amended Plan based upon the contract
(non-default) rate of interest.

Pursuant to the Amended Plan, the Debtors and
MLMCI/GACC will exchange mutual releases in customary
form on the Effective Date.

This Term Sheet does not constitute a vote or
agreement to vote for the Amended Plan, and no such
vote or agreement to vote has been solicited by CMI
or anyone acting on its behalf. MLMCI/GAAC's
acceptance or rejection of the Amended Plan is
conditioned upon their review and approval of all
aspects of the Amended Plan and Disclosure Statement.
The Effective Date of the Amended Plan must occur no
later than May 1, 2000; PROVIDED, HOWEVER, that if
the Effective Date has not occurred by that date but
the Debtors demonstrate to MLMCI/GACC's reasonable
satisfaction that the Effective Date is likely to
occur not later than June 1, 2000, the May 1, 2000
deadline will be extended to June 1, 2000.

CRIIMI MAE Inc.

By:
----------------------------

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<PAGE>

German American Capital Corporation

By:
----------------------------

Merrill Lynch Mortgage Capital Inc.

By:
----------------------------

<PAGE>

EXHIBIT 99.1

THIS IS NOT A SOLICITATION OF ACCEPTANCE OR REJECTION OF THE AMENDED JOINT PLAN
OF REORGANIZATION OF CRIIMI MAE INC., CRIIMI MAE MANAGEMENT, INC. AND CRIIMI MAE
HOLDINGS II, L.P. ACCEPTANCES OR REJECTIONS MAY NOT BE SOLICITED BY THE DEBTORS
UNTIL A DISCLOSURE STATEMENT HAS BEEN APPROVED BY THE BANKRUPTCY COURT. THIS
JOINT DISCLOSURE STATEMENT IS BEING SUBMITTED FOR APPROVAL BUT HAS NOT YET BEEN
APPROVED BY THE BANKRUPTCY COURT. IT IS THEREFORE NOTED AS "PROPOSED," WHICH
NOTATION WILL BE REMOVED AFTER APPROVAL BY THE BANKRUPTCY COURT.

UNITED STATES BANKRUPTCY COURT
DISTRICT OF MARYLAND
GREENBELT DIVISION

- -------------------------------
)
IN RE ) CHAPTER 11
)
CRIIMI MAE INC., ET AL., )
) CASE NOS. 98-2-3115 THROUGH 98-2-3117 (DK)
DEBTORS. ) (JOINTLY ADMINISTERED)
)
- -------------------------------

DEBTORS' JOINT DISCLOSURE STATEMENT [PROPOSED]

<TABLE>

<S> <C>
VENABLE, BAETJER AND HOWARD, LLP AKIN, GUMP, STRAUSS, HAUER & FELD, LLP
Richard L. Wasserman Stanley J.Samorajczyk, P.C.
Gregory A. Cross Michael S. Stamer
1800 Mercantile Bank &Trust Building 1333 New Hampshire Avenue, N.W.
Two Hopkins Plaza Washington, D.C. 20036
Baltimore, Maryland 21201 (202) 887-4000
(410) 244-7400

</TABLE>

Co-Counsel to CRIIMI MAE Inc. and CRIIMI MAE Holdings
II, L.P.

SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A.
Morton A. Faller
11921 Rockville Pike
Third Floor
Rockville, MD 20852-2753
(301) 231-0928

Counsel to CRIIMI MAE Management, Inc.

Dated: December 23, 1999

<PAGE>

IMPORTANT: THIS JOINT DISCLOSURE STATEMENT CONTAINS INFORMATION THAT MAY BEAR
UPON YOUR DECISION TO ACCEPT OR REJECT THE DEBTORS' AMENDED JOINT PLAN OF
REORGANIZATION. PLEASE READ THIS DOCUMENT WITH CARE.

<PAGE>

TABLE OF CONTENTS

PAGE

<S> <C> <C>
I. INTRODUCTION .............................................................................................2
II. PLAN SUMMARY AND KEY CONSIDERATIONS ......................................................................4
A. Plan Summary .........................................................................................4
B. Recommendation ......................................................................................16
C. Voting Instructions .................................................................................16
III. GENERAL
INFORMATION...................................................................................................18
A. The Debtors and Chapter 11 Filing and Other Chapter 11 Events........................................18
B. Business.............................................................................................23
C. The Portfolio........................................................................................31
D. Legal Proceedings....................................................................................35
E. Selected Historical Consolidated Financial Data......................................................43
F. Management's Discussion and Analysis of Financial Condition and Results of Operations................46
G. Quantitative and Qualitative Disclosures About Market Risk...........................................59
H. Market and Trading Information.......................................................................60
I. Management...........................................................................................61
IV. BUSINESS PLAN............................................................................................69
V. THE PLAN OF REORGANIZATION ..............................................................................70
A. Overview of the Plan ................................................................................70
B. Treatment of Claims and Interests Under the Plan ...................................................75
C. Confirmation and Effective Date Conditions ..........................................................84
D. The Reorganized Debtors .............................................................................85
E. Recapitalization Financing Including Issuance of New Securities......................................87
F. Sale of the CMBS Portfolio...........................................................................87
G. Potential New Equity Investment and Rights Offering .................................................87
H. Distributions Under the Plan ........................................................................89
I. General Information Concerning the Plan .............................................................93
VI. CONFIRMATION AND CONSUMMATION PROCEDURES ...............................................................101
A. Solicitation of Acceptances ........................................................................101
B. Confirmation Hearing ...............................................................................101
C. Confirmation .......................................................................................102
D. Consummation .......................................................................................105
E. Conditions to Effective Date .......................................................................106
VII. CERTAIN RISK FACTORS....................................................................................106
VIII. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS .............................................................114
IX. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN ..............................................117
A. Alternative Chapter 11 Plans .......................................................................117
B. Liquidation Under Chapter 7 ........................................................................117
X. CONCLUSION AND RECOMMENDATION ..........................................................................117

EXHIBITS

PAGE
Exhibit A Joint Plan of Reorganization of CRIIMI MAE Inc., CRIIMI MAE
Management, Inc. and CRIIMI MAE Holdings II, L.P. Under
Chapter 11 of the Bankruptcy Code............................................................ A-1
Exhibit B Unaudited Pro Forma Consolidated Financial Statements and
Projected Financial Information......................................................... B-1
Exhibit C Liquidation Analysis ........................................................................ C-1
Exhibit D CRIIMI MAE Financial Statements............................................................... D-1

</TABLE>

<PAGE>

THE DEBTORS AND THE OFFICIAL COMMITTEE OF EQUITY SECURITY HOLDERS OF
CRIIMI MAE INC. URGE ALL HOLDERS OF CLAIMS AND INTERESTS IN IMPAIRED CLASSES TO
VOTE TO ACCEPT THE DEBTORS' AMENDED JOINT PLAN OF REORGANIZATION. THE OFFICIAL
COMMITTEE OF EQUITY SECURITY HOLDERS HAS JOINED THE DEBTORS AS A CO-PROPONENT OF
THE DEBTORS' PLAN.

THIS DISCLOSURE STATEMENT IS DESIGNED TO PROVIDE ADEQUATE INFORMATION
TO ENABLE HOLDERS OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS TO MAKE AN
INFORMED JUDGMENT ON WHETHER TO ACCEPT OR REJECT THE DEBTORS' PLAN. ALL HOLDERS
OF CLAIMS AND INTERESTS ARE HEREBY ADVISED AND ENCOURAGED TO READ THIS
DISCLOSURE STATEMENT AND THE PLAN IN THEIR ENTIRETY BEFORE VOTING TO ACCEPT OR
REJECT THE PLAN. THE PLAN SUMMARY AND STATEMENTS MADE IN THIS DISCLOSURE
STATEMENT ARE QUALIFIED IN THEIR ENTIRETY BY REFERENCE TO THE PLAN, WHICH IS
INCLUDED HEREWITH AS EXHIBIT A, OTHER EXHIBITS INCLUDED HEREWITH AND OTHER
DOCUMENTS REFERENCED AS FILED WITH THE BANKRUPCTY COURT. FURTHERMORE, THE
PROJECTED FINANCIAL INFORMATION CONTAINED HEREIN IS UNAUDITED. THERE CAN BE NO
ASSURANCE THAT THE INFORMATION AND STATEMENTS CONTAINED HEREIN WILL CONTINUE TO
BE ACCURATE SUBSEQUENT TO THE DATE HEREOF OR THAT THIS DISCLOSURE STATEMENT
CONTAINS ALL MATERIAL INFORMATION.

ALL HOLDERS OF IMPAIRED CLAIMS AND INTERESTS SHOULD READ AND CONSIDER
THE MATTERS DESCRIBED IN THIS DISCLOSURE STATEMENT AS A WHOLE, INCLUDING THE
SECTION ENTITLED "RISK FACTORS", PRIOR TO VOTING ON THE PLAN. IN MAKING A
DECISION TO ACCEPT OR REJECT THE PLAN, EACH CLAIM AND INTEREST HOLDER MUST RELY
ON ITS OWN EXAMINATION OF THE DEBTORS AS DESCRIBED IN THIS DISCLOSURE STATEMENT
AND THE TERMS OF THE PLAN.

THIS DISCLOSURE STATEMENT HAS BEEN PREPARED IN ACCORDANCE WITH ss.1125
OF THE BANKRUPTCY CODE AND RULE 3016(b) OF THE FEDERAL RULES OF BANKRUPCY
PROCEDURE AND NOT IN ACCORDANCE WITH FEDERAL OR STATE SECURITIES LAWS. THIS
DISCLOSURE STATEMENT HAS NEITHER BEEN APPROVED NOR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "SEC"). NOR HAS THE SEC PASSED UPON THE ACCURANCY
OR ADEQUACY OF THE STATEMENTS CONTAINED HEREIN. THIS DISCLOSURE STATEMENT WAS
PREPARED TO PROVIDE HOLDERS OF CLAIMS AGAINST AND INTERESTS IN THE DEBTORS WITH
"ADEQUATE INFORMATION" (AS DEFINED IN THE BANKRUPTCY CODE) SO THAT THEY CAN MAKE
AN INFORMED JUDGMENT ABOUT THE PLAN. PERSONS OR ENTITIES TRADING IN, OR
OTHERWISE PURCHASING, SELLING, OR TRANSFERRING, CLAIMS AGAINST OR SECURITIES OF
THE DEBTORS SHOULD NOT RELY UPON THIS DISCLOSURE STATEMENT FOR SUCH PURPOSES AND
SHOULD EVALUATE THIS DISCLOSURE STATEMENT AND THE PLAN IN LIGHT OF THE PURPOSE
FOR WHICH THEY WERE PREPARED.

AS TO CONTESTED MATTERS, ADVERSARY PROCEEDINGS AND OTHER PENDING OR
THREATENED ACTIONS, THIS DISCLOSURE STATEMENT AND THE INFORMATION CONTAINED
HEREIN SHALL NOT BE CONSTRUED AS AN ADMISSION OF ANY FACT, CLAIM OR LIABILITY,
AS A STIPULATION OR AS A WAIVER, BUT RATHER AS STATEMENTS MADE IN SETTLEMENT
NEGOTIATIONS. NOR SHALL THE STATEMENTS SET FORTH HEREIN BE USED AS EVIDENCE OR
BIND ANY PARTY IN CONNECTION WITH ANY SECURITIES CLAIMS (AS THAT TERM IS DEFINED
IN THE PLAN).

THIS DISCLOSURE STATEMENT SHALL NOT BE ADMISSIBLE IN ANY NON-BANKRUPCY
PROCEEDING INVOLVING THE DEBTORS OR ANY OTHER PARTY NOR SHALL IT BE CONSTRUED TO
BE CONCLUSIVE ADVICE ON THE TAX, SECURITIES OR OTHER LEGAL EFFECTS OF THE PLAN
AS TO HOLDERS OF CLAIMS AGAINST OR INTERESTS IN THE DEBTORS.

<PAGE>

I. INTRODUCTION

On October 5, 1998, CRIIMI MAE Inc. ("CMI"), CRIIMI MAE Management,
Inc. ("CMM") and CRIIMI MAE Holdings II, L.P. ("Holdings") (together with CMI
and CMM, the "Debtors") filed voluntary petitions for relief under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code"). The Debtors and the
CMI Equity Committee hereby submit this Joint Disclosure Statement pursuant to
Section 1125 of the Bankruptcy Code (this "Disclosure Statement") in connection
with their solicitation of acceptances of their Amended Joint Plan of
Reorganization (the "Plan"), a copy of which is annexed hereto as Exhibit A. The
purpose of this Disclosure Statement, in accordance with the requirements of
Section 1125 of the Bankruptcy Code, is to provide "adequate information"
concerning the Plan, of a kind and in sufficient detail to enable a
hypothetical, reasonable investor, typical of holders of the classes of claims
or interests being solicited, to make an informed judgment whether to accept or
reject the Plan. This Disclosure Statement should be read in conjunction with
the Plan and the other exhibits to this Disclosure Statement and to the Plan.
All capitalized terms contained in this Disclosure Statement shall, unless
otherwise defined herein, have the meanings ascribed to such capitalized terms
in the Plan. References herein to the "Company" or "CRIIMI MAE" refer to CRIIMI
MAE Inc. and its consolidated subsidiaries, unless the context otherwise
indicates. References herein to Notes to Consolidated Financial Statements refer
to the Notes to Consolidated Financial Statements constituting a part of certain
publicly available financial statements of CRIIMI MAE to be attached as Exhibit
D to this Disclosure Statement.

The Plan is being distributed, with Ballots, to holders of Claims and
Interests in Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18,
A21, B1, B2, B5, B6, C1, C2, C5 and C6, the Classes of Claims and Interests that
are Impaired and entitled to vote under the Plan, in order to solicit their
acceptance of the Plan. Holders of Claims and Interests in Classes A8, A12, A14,
A15, A17, A19, A20, A22, A23, B3, B4, B7, C3, C4 and C7 are deemed to have
accepted the Plan because their respective Claims are not Impaired, and such
Holders are therefore not entitled to vote on the Plan. Accordingly, the votes
of Holders of Claims and Interests in such Classes are not being solicited. For
a description of the Classes of Claims and Interests and their treatment under
the Plan, see "THE PLAN OF REORGANIZATION -- Treatment of Claims and Interests
Under the Plan."

The Debtors and the CMI Equity Committee are seeking the acceptance of
the Plan by Holders of Claims and Interests in Classes A1, A2, A3, A4, A5, A6,
A7, A9, A10, A11, A13, A16, A18, A21, B1, B2, B5, B6, C1, C2, C5 and C6. The
Debtors and the CMI Equity Committee have prepared this Disclosure Statement in
connection with their solicitation of acceptances of the Plan. The United States
Bankruptcy Court for the District of Maryland, Greenbelt Division, Maryland
("the "Bankruptcy Court") has entered an order dated ____ ___, 2000 approving
this Disclosure Statement as containing information of a kind and in sufficient
detail to enable a hypothetical, reasonable investor, typical of each of the
holders of the Classes of Claims and Interests being solicited, to make an
informed judgment whether to accept the Plan. Such approval by the Bankruptcy
Court does not constitute a recommendation of the Plan by the Bankruptcy Court.

Section 1129(a) of the Bankruptcy Code allows the Bankruptcy Court to
confirm a plan if certain conditions have been met and if each class of claims
and interests that is impaired under the plan has voted to accept the plan.
Under Section 1126(c) of the Bankruptcy Code, a class of claims has accepted a
plan if such plan has been accepted by creditors in that class that hold at
least two-thirds in dollar amount and more than one-half in number of the
allowed claims of such class held by creditors that have voted to accept or
reject such plan, excluding holders whose acceptances or rejections were found
not to be in good faith. Under Section 1126(d) of the Bankruptcy Code, a class
of equity interests has accepted a plan if such plan has been accepted by
holders of such interests that hold at least two-thirds in amount of the allowed
interests of such class held by holders of such interests that have voted to
accept or reject such plan, excluding holders whose acceptances or rejections
were found not to be in good faith.

Under the Bankruptcy Code, only those Claims, the holders of which vote
to accept or reject the Plan, will be counted for purposes of determining
acceptance or rejection by any Impaired Class of Claims. Therefore, the Plan
could be approved by any Impaired Class of Claims with the affirmative vote of
significantly less than two-thirds in total dollar amount and one-half in total
number of such Claims. However, even if the Holders of all Claims in Impaired
Classes and entitled to vote under the Plan accept or are deemed to have
accepted the Plan, the

-2-
<PAGE>

Plan is subject to certain requirements under the Bankruptcy Code and might not
be confirmed by the Bankruptcy Court.

Section 1129(b) of the Bankruptcy Code permits the confirmation of a
plan notwithstanding the non-acceptance of such plan by one or more of the
classes of claims or interests impaired thereunder if (i) at least one impaired
class of claims accepts the plan (such acceptance to be determined without
giving effect to any acceptances of "insiders," as such term is defined in
Section 101 of the Bankruptcy Code) and (ii) the Bankruptcy Court finds that,
with respect to the non-accepting class or classes, the plan does not
discriminate unfairly and is fair and equitable. The Debtors reserve the right
to seek confirmation of the Plan under Section 1129(b) of the Bankruptcy Code if
any class of Claims entitled to vote on the Plan votes to reject the Plan.

If more than one plan is submitted to creditors and equity security
holders for voting, the Bankruptcy Court may confirm only one such plan. If the
confirmation requirements set forth in the Bankruptcy Code are met with respect
to more than one plan, the Bankruptcy Court will consider the preferences of
creditors and equity security holders in determining which plan to confirm. The
Debtors and the Official Committee of Equity Security Holders urge all creditors
and equity security holders to vote in favor of the Debtors' Amended Joint Plan
and reject any other plan. The Debtors and the Official Committee of Equity
Security Holders believe that confirmation of the Debtors' Amended Joint Plan is
in the best interest of all creditors and equity security holders. As set forth
in more detail in the Plan and this Disclosure Statement, the Debtors' Amended
Joint Plan of Reorganization provides for the payment in full of all creditors,
preservation of value for equity security holders and a reorganization of the
Debtors and continuation of the business of CRIIMI MAE as a going concern.

The Debtors and the CMI Equity Committee are soliciting votes for the
acceptance of the Plan from the Holders of Claims and Interests in Classes A1,
A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2, B5, B6, C1,
C2, C5 and C6. The Debtors and the CMI Equity Committee believe that the Plan
provides the best possible result for all Holders of Claims and Interests. The
Debtors and the CMI Equity Committee believe further that, under the Plan,
Holders of Claims and Interests will receive a greater recovery than such
Holders would receive if the Debtors' chapter 11 cases were converted to cases
under chapter 7 of the Bankruptcy Code or an alternative plan were confirmed by
the Bankruptcy Court.

IMPORTANT INFORMATION

TO BE COUNTED, YOUR BALLOT MUST BE RECEIVED BY 5:00 P.M. EASTERN
STANDARD TIME, ON [________,] 2000. BALLOTS SHOULD BE MAILED OR DELIVERED TO:
CRIIMI MAE INC., CRIIMI MAE MANAGEMENT, INC. AND CRIIMI MAE HOLDINGS II, L.P.,
C/O [___].

THE DEBTORS BELIEVE THAT THE PLAN PROVIDES THE BEST POSSIBLE RESULT FOR
ALL HOLDERS OF CLAIMS AND INTERESTS.

THIS DISCLOSURE STATEMENT DOES NOT CONSTITUTE AN OFFER OR SOLICITATION
IN ANY STATE OR OTHER JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED.

THIS DISCLOSURE STATEMENT IS PROVIDED FOR USE SOLELY BY HOLDERS OF
CLAIMS AND INTERESTS, AND THEIR ADVISORS, IN CONNECTION WITH THEIR DETERMINATION
TO ACCEPT OR REJECT THE PLAN.

HOLDERS OF CLAIMS AND INTERESTS SHOULD NOT CONSTRUE THE CONTENTS OF
THIS DISCLOSURE STATEMENT AS PROVIDING ANY LEGAL, BUSINESS, FINANCIAL OR TAX
ADVICE. EACH SUCH HOLDER SHOULD, THEREFORE, CONSULT WITH HIS, HER OR ITS OWN
LEGAL, BUSINESS, FINANCIAL AND/OR TAX ADVISORS AS TO ANY SUCH MATTERS CONCERNING
THE PLAN AND THE TRANSACTIONS CONTEMPLATED THEREBY.

-3-
<PAGE>

THE SUMMARY OF THE PLAN CONTAINED HEREIN DOES NOT PURPORT TO BE
COMPLETE AND IS SUBJECT, AND QUALIFIED IN ITS ENTIRETY BY REFERENCE TO, THE
PROVISIONS OF THE PLAN, WHICH IS ATTACHED HERETO AS EXHIBIT A.

-4-
<PAGE>

II. PLAN SUMMARY AND KEY CONSIDERATIONS

The following summary is qualified in its entirety by reference to the
more detailed information appearing elsewhere in this Disclosure Statement, to
the Plan and to the exhibits to this Disclosure Statement and to the Plan. This
summary does not purport to be complete and should not be relied upon for voting
purposes. A more complete description of the Plan is provided in "THE PLAN OF
REORGANIZATION."

All Holders of Claims and Interests whose votes are being solicited are
hereby advised and encouraged to read this Disclosure Statement, the Plan and
the exhibits to this Disclosure Statement and to the Plan in their entirety
before voting to accept or reject the Plan.

A. Plan Summary

The Plan contemplates the payment in full of all of the Allowed Claims
of CMI, CMM and Holdings primarily through recapitalization financing
aggregating at least $873 million (the "Recapitalization Financing"). The
majority of such Recapitalization Financing is expected to consist of debt
financing from existing debtholders (the "New Debt") and the balance is expected
to result from the sale of selected CMBS (the "CMBS Sale"). In particular, CMI
has agreed to restructure its secured debt with two of its largest creditors,
Merrill Lynch Mortgage Capital Inc. ("Merrill") and German American Capital
Corporation ("GACC"), in accordance with the term sheet attached as Exhibit 1 to
the Plan. This restructuring would be the cornerstone of CMI's secured financing
as it emerges from Chapter 11 under the Debtors' Amended Plan. Although not
required to fund the Plan, the Debtors may seek new equity capital from one or
more investors to partially fund the Plan. Any such new equity will constitute
Recapitalization Financing. See "THE PLAN OF REORGANIZATION" for a further
discussion of potential new equity capital.

The Plan provides for distributions to creditors as summarized below:

CLAIMS AGAINST AND INTERESTS IN CMI

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
N/A Administrative Claims (Unclassified) Each Holder will be paid Cash equal to the 100%
amount of such Claim on the later of the
Effective Date or the day on which such
claim becomes an Allowed Claim, unless (i)
the Holder and Reorganized CMI,
Reorganized CMM or Reorganized Holdings,
as the case may be, agree to other
treatment, or (ii) an order of the
Bankruptcy Court provides for other terms.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
N/A Priority Tax Claims (Unclassified) Each Holder will receive, at the sole 100%
option of Reorganized CMI, Reorganized CMM
or Reorganized Holdings, as the case may
be, (i) Cash equal to the unpaid portion
of such Claim on the later of the
Effective Date and the date on which such
Claim becomes an Allowed Priority Tax
Claim, or (ii) equal quarterly Cash
payments in an
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-5-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
aggregate amount equal to such Claim,
together with interest at a fixed annual
rate to be determined by the Bankruptcy
Court or otherwise agreed to by Reorganized
CMI, Reorganized CMM or Reorganized Holdings,
as the case may be, and such Holder over a
period through the sixth anniversary of the
date of assessment of such Claim, or upon such
other terms determined by the Bankruptcy
Court.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A1 Citicorp Secured Claims IMPAIRED. Reorganized CMI will enter 100%
into on the Effective Date a refinancing
of the principal amount (or purchase
price) owing to the Holder of the Allowed
Class A1 Claim with respect to the CMO-IV
Bonds upon terms to be mutually agreed
upon by CMI and the Holder. Each Holder
will also receive on the Effective Date
payment in full in Cash of any remaining
balance of its Allowed Class A1 Claim
after the refinancing referred to in the
preceding sentence, with interest on such
Allowed Claim calculated at the Plan
Rate. Class A1 is Impaired and,
accordingly, Holders of such Claims will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A2 First Union Secured Claim IMPAIRED. The Holder will receive on 100%
the Effective Date payment in full in Cash
of any remaining balance of such Claim
with interest thereon calculated at the
Plan Rate. Class A2 is Impaired and,
accordingly, the Holder of such Claim will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A3 GACC Secured Claim IMPAIRED. The Holder will receive on 100%
the Effective Date the treatment of its
Allowed Secured Claim set forth on Exhibit
1 to the Plan, or such other treatment as
may be agreed to by CMI and the Holder.
Class A3 is Impaired and, accordingly, the
Holder of such Claim will be entitled to
vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A4 Lehman Secured Claim IMPAIRED. The Holder will receive on 100%
the Effective Date payment in full in Cash
of any remaining balance of such Claim
with interest thereon calculated at the
Plan Rate. Class A4 is Impaired and,
accordingly, the Holder of such Claim will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-6-
<PAGE>

A5 Merrill Secured Claim IMPAIRED. The Holder will receive on 100%
the Effective Date the treatment of its
Allowed Secured Claim set forth on Exhibit
1 of the Plan, or such other treatment as
may be agreed to by CMI and the Holder.
Class A5 is Impaired and, accordingly, the
Holder of such Claim will be entitled to
vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A6 Morgan Stanley Secured Claim IMPAIRED. The Holder will receive on 100%
the Effective Date payment in full in Cash
of any remaining balance of such Claim
with interest thereon calculated at the
Plan Rate. Class A6 is Impaired and,
accordingly, the Holder of such Claim will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A7 Other Secured Claims IMPAIRED. Each Holder (if any) will 100%
receive on the Effective Date either (i)
payment in full in Cash of such Claim with
interest thereon calculated at the Plan
Rate; (ii) if CMI so elects, the
collateral securing the Allowed Class A7
Claim (if any) in full satisfaction of
such claim; or (iii) such other treatment
as may be agreed to by CMI and the Holder
(if any). Class A7 is Impaired and,
accordingly, Holders of such Claims (if
any) will be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A8 Priority Claims UNIMPAIRED. Each Holder will receive 100%
on the Effective Date payment in full in
Cash of such Claim including Plan Interest
thereon. Class A8 is Unimpaired and,
accordingly, is not entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A9 Old Senior Note Claims IMPAIRED. Each Holder as of the 100%
Distribution Record Date will receive on
the Effective Date in exchange for its Old
Senior Note payment in full of its Allowed
Class A9 Claim, with any accrued and
unpaid pre-petition interest thereon
calculated at the Plan Rate and any
accrued and unpaid post-petition interest
thereon calculated at the Plan Interest
Rate, in the form of a Class A9 Note in a
principal amount equal to such Holder's
Allowed Class A9 Claim. All Old Senior
Notes shall be deemed cancelled as of the
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-7-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

- ---------- ------------------------------------------------- -------------------------------------------- ------------
A10 CMI General Unsecured Claims IMPAIRED. Each Holder will receive on 100%
the Effective Date payment in full of its
Allowed Class A10 Claim, with accrued and
unpaid pre-petition interest thereon (if
any) calculated at the non-default
contract rate of interest in such Holder's
documents for those Holders of Allowed
Class A10 Claims who have an interest rate
applicable to such Holder's Allowed Class
A10 Claim and any accrued and unpaid
post-petition interest thereon calculated
at the Plan Interest rate, in the form of
(i) such Holder's Pro Rata share of the
Class A10 Cash Payment (after payment of
the convenience class amount provided for
hereinafter) and (ii) a Class A10 Note in
an amount equal to the remaining balance
of such Holders' Allowed Class A10 Claim.
In lieu of the foregoing treatment, there
shall be a convenience class option as
follows: any Holder of an Allowed Class
A10 Claim (or whose Allowed Claim is
treated within this Class) whose Allowed
Claim is for $150,000 or less and elects
the convenience class treatment on its
ballot, or whose Allowed Claim is for an
amount in excess of $150,000 and elects in
writing on its ballot to reduce its claim
to $150,000 and accept convenience class
treatment thereof, shall be entitled to
receive payment in Cash on the Effective
Date of the allowed amount of such
Holders' Allowed Class A10 Claim in full
satisfaction of said claim, with accrued
and unpaid pre-petition interest thereon
(if any) calculated at the non-default
contract rate of interest in such Holders'
documents for those Holders of Allowed
Class A10 Claims electing convenience
class treatment who have an interest rate
applicable to such Holder's Allowed Claim
and any accrued and unpaid post-petition
interest thereon calculated at the Plan
Interest rate. The total amount to be
paid by CMI with respect ot the foregoing
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-8-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
convenience class option shall not exceed
the aggregate amount of $10 million and
such aggregate amount shall be paid from
and thereby reduce the funds in the Class
A10 Cash Payment. The Cash Payment Amount
is expected to be, depending on the amount
of the CMBS Sale Proceeds, approximately
$40 million. Class A10 is Impaired and,
accordingly, Holders of such Claims will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A11 Guarantee Claims IMPAIRED. If, and only to the extent 100%
that, an Allowed Class A11 Claim is not
fully treated with respect to such
Holder's underlying Allowed Claim under
the Plan treatment for Claims against CMM
or Holdings, as the case may be, any
remaining Allowed Class A11 Claim (if any)
will be included as part of the CMI
General Unsecured Claims and treated for
all purposes as part of Class A10. Class
A11 is Impaired and, accordingly, is
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A12 Freddie Mac Claims UNIMPAIRED. CMI's obligation under the 100%
Freddie Mac Agreement shall be deemed
reaffirmed on the Effective Date, and the
Claims of Freddie Mac numbered 335 and 497
on the July 2, 1999 claims register, each
in the amount of $230,448,487.24, shall be
deemed withdrawn and thereby disallowed as
of the Effective Date. Class A12 is
Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A13 Intercompany Claims IMPAIRED. Each Holder will not receive No payment
any payment under the Plan on account of shall be
such Claim. Class A13 is Impaired and, made under
accordingly, Holders of such Claims will the Plan
be entitled to vote on the Plan. but the
claim
amounts
will
remain on
the
financial
books of
the
respective
Debtors.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-9-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
A14 Series B Preferred Stock UNIMPAIRED. Each Holder as of the 100%
Effective Date will retain its Series B
Preferred Stock. Each Holder as of the
Distribution Record Date will receive
payment in Cash on the Effective Date of
the amount of any accrued and past due
dividends on its shares of Series B
Preferred Stock. Class A14 is Unimpaired
and, accordingly, is not entitled to vote
on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A15 Series B Preferred Stock Securities Claims UNIMPAIRED. Each Holder (if any) will, 100%
if, as and when any such Claim is Allowed
by Final Order, receive in full
satisfaction of any such Allowed Class A15
Claim its share of any Insurance Proceeds
applicable thereto plus, if such Allowed
Class A15 Claim (if any) is not paid in
full from such Insurance Proceeds, CMI
Common Stock in an amount equal in value,
as of the date of issuance thereof, to the
balance (if any) of such Allowed Class A15
Claim, provided that any such Claim not
timely filed (and in any event not filed
before the Confirmation Date) shall be
released and discharged under the Plan and
Confirmation Order. Class A15 is
Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A16 Old Series C Preferred Stock IMPAIRED. Each Holder as of the 100%
Distribution Record Date will receive
in exchange for its Old Series C
Preferred Stock an identical number of
shares of New Series C Preferred Stock
issued effective as of the Effective
Date, plus Cash equal to the amount of
any accrued and past due dividends
thereon, or such other treatment as
may be agreed to by CMI, the CMI Equity
Committee and the Holder(s) of the
Allowed Class A16 Interests. All shares
of Old Series C Preferred Stock shall be
deemed cancelled as of the Effective Date.
Class A16 is Impaired and, accordingly,
Holders of such Interests will be entitled
to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A17 Old Series C Preferred Stock Securities Claims UNIMPAIRED. Each Holder (if any) 100%
will, if, as and when any such Claim is
allowed
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-10-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
by Final Order, receive in full satisfaction
of any such Allowed Class A17 Claim its
share of any Insurance Proceeds applicable
thereto plus, if such Allowed Class A17
Claim (if any) is not paid in full from such
Insurance Proceeds, CMI Common Stock in an
amount equal in value, as of the date of
issuance thereof, to the balance (if any) of
such Allowed Class A17 Claim, provided that
any such Claim not timely filed (and in any
event not filed before the Confirmation
Date) shall be released and discharged under
the Plan and Confirmation Order. Class A17
is Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A18 Old Series D Preferred Stock IMPAIRED. Each Holder as of the 100%
Distribution Record Date will receive
in exchange for its Old Series D
Preferred Stock an identical number of
shares of New Series D Preferred Stock
issued effective as of the Effective
Date, plus Cash equal to the amount of
any accrued and past due dividends
thereon, or such other treatment as
may be agreed to by CMI, the CMI Equity
Committee and the Holder(s) of the
Allowed Class A18 Interests. All shares
of Old Series D Preferred Stock shall be
deemed cancelled as of the Effective
Date. Class A18 is Impaired and,
accordingly, Holders of such
Interests will be entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A19 Old Series D Preferred Stock Securities Claims UNIMPAIRED. Each Holder (if any) will, 100%
if, as and when any such Claim is Allowed
by Final Order, receive in full
satisfaction of any such Allowed Class A19
Claim its share of any Insurance Proceeds
applicable thereto plus, if such Allowed
Class A19 Claim (if any) is not paid in
full from such Insurance Proceeds, CMI
Common Stock in an amount equal in value,
as of the date of issuance thereof, to the
balance (if any) of such Allowed Class A19
Claim, provided that any such Claim not
timely filed (and in any event not filed
before the Confirmation Date) shall be
released and discharged under the Plan and
Confirmation Order. Class A19 is
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-11-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------

CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A20 Series F Dividend Preferred Stock UNIMPAIRED. Each Holder as of the 100%
Effective Date will retain its Series F
Dividend Preferred Stock. There shall
be no change in the relative rights and
preferences of the Series F Dividend
Preferred Stock. Class A20 is Unimpaired
and, accordingly, is not entitled to vote
on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A21 CMI Common Stock IMPAIRED. Each Holder as of the 100%
Effective Date will retain its CMI Common
Stock. Class A21 is Impaired and,
accordingly, Holders of such Interests
will be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A22 Stock Options UNIMPAIRED. Each Holder of a Stock 100%
Option as of the Effective Date will
retain its Stock Option. Class A22 is
Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
A23 CMI Common Stock Securities Claims UNIMPAIRED. All Holders will receive 100%
in full satisfaction of any such Allowed
Class A23 Claims their share of any
Insurance Proceeds applicable thereto
plus, if such Allowed Class A23 Claims (if
any) are not paid in full from such
Insurance Proceeds, CMI Common Stock in an
amount equal in value, as of the date of
issuance thereof, to the balance (if any)
of such Allowed Class A23 Claims. Class
A23 is Unimpaired and, accordingly, is not
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

CLAIMS AGAINST AND INTERESTS IN CMM

-12-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------
CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
B2 Other Secured Claims IMPAIRED. Each Holder (if any) will 100%
receive on the Effective Date either (i)
payment in full in Cash of such Claim with
interest thereon calculated at the Plan
Rate; (ii) if CMI so elects, the
collateral securing the Allowed Class B2
Claim (if any) in full satisfaction of
such Claim; or (iii) such other treatment
as may be agreed to by CMI and the
Holder(s) (if any) of Allowed Class B2
Claim(s). Class B2 is Impaired and,
accordingly, Holders of such Claims will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
B3 Priority Claims UNIMPAIRED. Each Holder will receive 100%
on the Effective Date payment in full in
Cash of such Claim including Plan Interest
thereon. Class B3 is Unimpaired and,
accordingly, is not entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
B4 Guarantee Claims UNIMPAIRED. Each Holder (if any) shall 100%
be paid, if, as and when any such Claim is
allowed by Final Order, in Cash in full by
CMM or Reorganized CMM including Plan
Interest thereon if, and only to the extent
not fully treated with respect to such
Holder's underlying Allowed Claim under
the Plan treatment for Claims against
CMI or Holdings, as the case may be.
Class B4 is Unimpaired and, accordingly,
is not entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
B5 CMM General Unsecured Claims IMPAIRED. Each Holder will receive on 100%
the Effective Date payment in full in Cash
of such Claims, with accrued and unpaid
pre-petition interest thereon (if any)
calculated at the non-default contract
rate of interest in such Holder's
documents for those Holders of Allowed
Class B5 Claims who have an interest rate
applicable to such Holder's Allowed Class
B5 Claim and any accrued and unpaid
post-petition interest thereon
calculated at the Plan Interest Rate.
Class B5 is Impaired and, accordingly,
Holders of such Claims will be
entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-13-
<PAGE>

</TABLE>

CLAIMS AGAINST AND INTERESTS IN HOLDINGS

- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
CLASS DESCRIPTION TREATMENT ESTIMATED
RECOVERY
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C1 Citicorp Secured Claims IMPAIRED. Each Holder (if any) will 100%
receive on the Effective Date payment in
full in Cash of such Claim with interest
thereon calculated at the Plan Rate.
Class C1 is Impaired and, accordingly, the
Holder of such Claim will be entitled to
vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C2 Other Secured Claims IMPAIRED. Each Holder (if any) will 100%
receive on the Effective Date either (i)
payment in full in Cash of such Claim with
interest thereon calculated at the Plan
Rate; (ii) if CMI so elects, the
collateral securing the Allowed Class C2
Claim (if any) in full satisfaction of
such Claim; or (iii) such other treatment
as may be agreed to by CMI and the
Holder(s) (if any) of Allowed Class C2
Claim(s). Class C2 is Impaired and,
accordingly, Holders of such Claims will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-14-
<PAGE>

- ---------- ------------------------------------------------- -------------------------------------------- ------------
<S> <C> <C> <C>
C3 Priority Claims UNIMPAIRED. Each Holder will receive 100%
on the Effective Date payment in full in
Cash of such Claim including Plan Interest
thereon. Class C3 is Unimpaired and,
accordingly, is not entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C4 Guarantee Claims UNIMPAIRED. Each Holder (if any) will 100%
receive if, as and when any such Claim is
allowed by Final Order payment in Cash in
full including Plan Interest thereon if,
and only to the extent not fully treated
with respect to such Holder's underlying
Allowed Claim under the Plan treatment for
Claims against CMI or CMM, as the case may
be. Class C4 is Unimpaired and,
accordingly, is not entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C5 Holdings General Unsecured Claims IMPAIRED. Each Holder (if any) will 100%
if, as and when any such Claim is allowed
by Final Order, be included as part of the
CMI General Unsecured Claims and included
for all purposes in the treatment provided
to Class A10. Class C5 is Impaired and,
accordingly, Holders of such Claims will
be entitled to vote on the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C6 Intercompany Claims IMPAIRED. Each Holder will not receive No payment
any payment under the Plan on account of shall be
such Claim. Class C6 is Impaired and, made under
accordingly, Holders of such Claims will the Plan
be entitled to vote on the Plan. but the
claim
amounts
will remain
on the
financial
books of
the
respective
Debtors.
- ---------- ------------------------------------------------- -------------------------------------------- ------------
C7 Interests in Holdings UNIMPAIRED. The Holder will retain its 100%
Interest. Class C7 is Unimpaired and,
accordingly, is not entitled to vote on
the Plan.
- ---------- ------------------------------------------------- -------------------------------------------- ------------

</TABLE>

-15-
<PAGE>

The Debtors and the CMI Equity Committee presently intend to seek to
consummate the Plan and to cause the Effective Date to occur on or about
_________________. There can be no assurance, however, as to when the Effective
Date actually will occur.

In making investment decisions, Holders of Claims and Interests in
Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2,
B5, B6, C1, C2, C5 and C6, must rely on their own examination of the Debtors and
the terms of the reorganization, including the merits and risks involved. Each
Holder in a solicited Class should consult with its own legal, business,
financial and tax advisors with respect to any such matters concerning this
Disclosure Statement, the Plan and the transactions contemplated hereby and
thereby.

-16-
<PAGE>

B. Recommendation

THE DEBTORS AND THE CMI EQUITY COMMITTEE STRONGLY RECOMMEND THAT EACH
HOLDER OF CLAIMS OR INTERESTS ENTITLED TO VOTE ON THE PLAN VOTE TO ACCEPT THE
PLAN.

The Debtors and the CMI Equity Committee believe that:

1. the Plan provides the best possible result for the Holders of Claims
and Interests;

2. with respect to each Impaired Class of Claims and Interests, the
distributions under the Plan are the same as or greater than the amounts that
would be received if the Debtors were liquidated under chapter 7 of the
Bankruptcy Code; and

3. acceptance of the Plan is in the best interests of the Holders of
Claims and Interests.

Prior to deciding whether to vote in favor of the Plan, Holders of
Claims and Interests in the solicited Classes should consider carefully all of
the information contained in this Disclosure Statement, including the risk
factors described in "CERTAIN RISK FACTORS."

C. Voting Instructions

A Ballot to be used to accept or reject the Plan has been enclosed with
all copies of this Disclosure Statement mailed to Holders of Claims and
Interests whose Claims and Interests are Impaired by provisions of the Plan and
who are entitled to vote on the Plan. Accordingly, this Disclosure Statement
(and the exhibits hereto), together with the accompanying Ballot and the related
materials delivered together herewith, are being furnished to Holders of Claims
and Interests in Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16,
A18, A21, B1, B2, B5, B6, C1, C2, C5 and C6 and may not be relied upon or used
for any purpose other than to determine whether or not to vote to accept or
reject the Plan.

Ballots with respect to the Plan will be accepted by the Debtors until
5:00 p.m., Eastern Standard Time, on ____ __, 2000 (the "Voting Deadline").
Except to the extent the Debtors so determine or as permitted by the Bankruptcy
Court pursuant to Bankruptcy Rule 3018, Ballots that are received after the
Voting Deadline will not be accepted or used by the Debtors in connection with
the Debtors' request for confirmation of the Plan.

The Debtors have retained _____ as their voting and tabulation agent in
connection with the Plan (the "Voting Agent").

Consistent with the provisions of Rule 3018 of the Bankruptcy Rules,
the Court has fixed the Voting Record Date (the close of business, Eastern
Standard Time, on ____ _, 2000) as the time and date for the determination of
Holders of record of Interests in Classes A9, A16, A18 and A21 who are entitled
to vote on the Plan. If the Holder of record of any solicited Interest is not
also the beneficial owner of such Interest, the vote to accept or reject the
Plan must be cast by the beneficial owner of such Interest.

For purposes of voting by Classes A9, A16, A18 and A21 to accept or
reject the Plan, the term "Holder" means a beneficial owner of Common Stock, Old
Senior Notes, Old Series C Preferred Stock, or Old Series D Preferred Stock (the
"Securities") on the Voting Record Date. A "beneficial owner" is the person who
enjoys the benefits of ownership of the securities (i.e., has a pecuniary
interest in the securities) even though title of the securities may be in
another name. The term "Holder" with respect to other Claims and Interests means
the person who holds such Claim or Interest in such Person's capacity as the
holder of such Claim or Interest. Only beneficial

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<PAGE>

owners (or their authorized signatories) of the Securities and Holders of
Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2,
B5, B6, C1, C2, C5 and C6 Claims as of the Petition Date (or transferees
thereof) are eligible to vote on the Plan.

All votes to accept or reject the Plan must be cast by using a Ballot.
Votes which are cast in any manner other than by using a Ballot will not be
counted.

PROCEDURES FOR CLASSES A9, A16, A18 AND A21:

For purposes of voting to accept or reject the Plan, if you hold
Exchanged Securities in physical certificated form that are registered in your
own name, you can vote on the Plan by completing the information requested on
the ballot, signing, dating, and indicating your vote on the ballot, and
returning the completed original ballot in the enclosed, pre-addressed,
postage-paid envelope so that it is actually received by the Voting Agent before
the Voting Deadline. Any beneficial owner holding Exchanged Securities in
"street name" can vote on the Plan in one of the two following ways:

IF YOUR BALLOT HAS ALREADY BEEN SIGNED (OR "PREVALIDATED") BY YOUR
NOMINEE (YOUR BROKER, BANKER, BANK, OTHER NOMINEE OR THEIR AGENT): You can vote
on the Plan by completing the information requested on the ballot, indicating
your vote on the ballot, and returning the completed original ballot in the
enclosed, preaddressed, postage-paid envelope so that it is actually received by
the Voting Agent before the Voting Deadline.

IF YOUR BALLOT HAS NOT BEEN SIGNED (OR "PREVALIDATED") BY YOUR NOMINEE
(BROKER, BANK, OTHER NOMINEE, OR THEIR AGENT): You can vote on the Plan by
completing the information requested on the ballot, signing, dating and
indicating your vote on the ballot, and returning the completed original ballot
to your nominee in sufficient time for your nominee then to forward your vote to
the Voting Agent so that it is actually received by the Voting Agent before the
Voting Deadline.

If you are a brokerage firm, commercial bank, trust company or other
nominee which is the registered holder of Exchanged Securities, please forward a
copy of this Disclosure Statement, the appropriate ballot or ballots, and any
other enclosed materials to each beneficial owner, AND;

IF YOU HAVE SIGNED (OR "PREVALIDATED") the ballot, the ballot should be
completed by the beneficial owner and returned by the beneficial owner directly
to the Voting Agent so that such ballot is actually received by the Voting Agent
before the Voting Deadline.

IF YOU HAVE NOT SIGNED (OR "PREVALIDATED") the ballot, you must collect
the ballot and complete the master ballot, and deliver the completed original
master ballot to the Voting Agent so that it is actually received by the Voting
Agent before the Voting Deadline.

Clearing Systems should arrange for their respective participants to
vote by executing an omnibus proxy, assignment letter form, or similar document,
in such participants' favor.

If your Ballot is damaged or lost, or if you do not receive a Ballot,
you may request a replacement by contacting:

[CONTACT INFORMATION FOR VOTING AGENT TO BE INSERTED]

GENERAL INSTRUCTIONS FOR CLASSES A1, A2, A3, A4, A5, A6, A7, A9, A10,
A11, A13, A16, A18, A21, B1, B2, B5, B6, C1, C2, C5 AND C6:

After carefully reviewing the Plan, including all exhibits thereto, and
this Disclosure Statement and its exhibits, please indicate your vote on the
enclosed Ballot and return it in the envelope provided. In voting to accept

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<PAGE>

or reject the Plan, please use only the Ballot sent to you with this Disclosure
Statement. Please complete and sign your Ballot in accordance with the
instructions set forth on the Ballot and return it in the enclosed envelope.

Any Ballot received which does not indicate either an acceptance or
rejection of the Plan or which indicates both an acceptance and rejection of the
Plan shall be deemed to be an acceptance of the Plan.

This Disclosure Statement has been approved by order of the Bankruptcy
Court dated _______ ___, 2000, as containing information of a kind and in
sufficient detail to enable a hypothetical, reasonable investor, typical of a
holder of an Interest, to make an informed judgment whether to accept or reject
the Plan. Approval of this Disclosure Statement by the Bankruptcy Court does not
constitute a ruling as to the fairness or merits of the Plan.

NO STATEMENTS OR INFORMATION CONCERNING THE DEBTORS OR THE REORGANIZED
DEBTORS OR ANY OF THE ASSETS OR THE BUSINESS OF THE DEBTORS MAY BE MADE OR
SHOULD BE RELIED UPON, OTHER THAN AS SET FORTH IN THIS DISCLOSURE STATEMENT OR
AS MAY HEREAFTER BE AUTHORIZED BY THE BANKRUPTCY COURT. THE STATEMENTS AND
INFORMATION ABOUT THE DEBTORS IN THIS DISCLOSURE STATEMENT HAVE BEEN PREPARED BY
THE DEBTORS.

The Bankruptcy Court will hold a confirmation hearing at which the
Bankruptcy Court will consider objections to confirmation, if any, commencing at
__ __.m., Eastern Standard Time, on ______ __, 2000, United States Bankruptcy
Court, District of Maryland, Greenbelt Division (the "Confirmation Hearing").
The Confirmation Hearing may be adjourned from time to time without notice other
than the announcement of an adjourned date at the Confirmation Hearing.
Objections to Confirmation of the Plan, if any, must be in writing and served
and filed as described in the Plan and "THE PLAN OF REORGANIZATION
- --Confirmation And Consummation Procedures -- Confirmation Hearing."

IN ORDER FOR YOUR BALLOT TO BE COUNTED, YOUR BALLOT MUST BE COMPLETED
AS SET FORTH ABOVE AND RECEIVED BY THE VOTING DEADLINE (5:00 P.M., EASTERN
STANDARD TIME, ON _____ __, 2000). BALLOTS SHOULD BE MAILED TO:

[------]

OR IF DELIVERED BY COURIER OR BY HAND, TO:

[------]

THE FOREGOING IS A SUMMARY. THIS DISCLOSURE STATEMENT AND THE EXHIBITS
HERETO SHOULD BE READ IN THEIR ENTIRETY BY ALL HOLDERS OF CLAIMS AND INTERESTS
IN CLASSES A1, A2, A3, A4, A5, A6, A7, A9, A10, A13, A16, A18, A21, B1, B2, B5,
B6, C1, C2, C5 AND C6 IN DETERMINING WHETHER TO ACCEPT OR REJECT THE PLAN.

III. GENERAL INFORMATION

FORWARD-LOOKING STATEMENTS. WHEN USED IN THIS DISCLOSURE STATEMENT, THE WORDS
"BELIEVES," "ANTICIPATES," "EXPECTS" AND SIMILAR EXPRESSIONS ARE INTENDED TO
IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN
RISKS AND UNCERTAINTIES, WHICH COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY,
INCLUDING, BUT NOT LIMITED TO, THE RISK FACTORS CONTAINED UNDER THE HEADINGS
"CERTAIN RISK FACTORS," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS," "BUSINESS PLAN AND PROJECTIONS" AND THE
"LIQUIDATION ANALYSIS" SET FORTH IN THIS DISCLOSURE STATEMENT. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
PUBLICLY REVISE THESE FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR
CIRCUMSTANCES OCCURRING AFTER THE DATE HEREOF OR TO REFLECT THE OCCURRENCE OF
UNANTICIPATED EVENTS.

The Debtors and the CMI Equity Committee have prepared this Disclosure
Statement in connection with their solicitation of acceptances of the Plan. No
statements or information concerning the Debtors or the

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<PAGE>

Reorganized Debtors or their operations, or with respect to the distributions to
be made under the Plan, may be made or should be relied upon other than as set
forth in this Disclosure Statement or as may hereafter be authorized by the
Bankruptcy Court.

A. THE DEBTORS AND CHAPTER 11 FILING AND OTHER CHAPTER 11 EVENTS

CHAPTER 11 FILING

Prior to the Petition Date, CRIIMI MAE financed a substantial portion
of its Subordinated CMBS acquisitions with short-term, variable-rate financing
facilities secured by the Company's CMBS. The agreements governing these
financing arrangements typically required the Company to maintain collateral
with a market value not less than a specified percentage of the outstanding
indebtedness ("loan-to-value ratio"). The agreements further provided that the
creditors could require the Company to provide cash or additional collateral if
the market value of the existing collateral fell below this minimum amount.

As a result of the turmoil in the capital markets commencing in late
summer of 1998, the spreads between CMBS yields and yields on Treasury
securities with comparable maturities began to widen substantially and rapidly.
Due to this widening of CMBS spreads, the market value of the CMBS securing the
Company's short-term, variable-rate financing facilities declined. CRIIMI MAE's
short-term secured creditors perceived that the value of the CMBS securing their
facilities with the Company had fallen below the minimum loan-to-value ratio
described above and, consequently, made demand upon the Company to provide cash
or additional collateral with sufficient value to cure the perceived value
deficiency. In August and September of 1998, the Company received and met
collateral calls from its secured creditors. At the same time, CRIIMI MAE was in
negotiations with various third parties in an effort to obtain additional debt
and equity financing that would provide the Company with additional liquidity.

On Friday afternoon, October 2, 1998, the Company was in the closing
negotiations of a refinancing with one of its unsecured creditors that would
have provided the Company with additional borrowings when it received a
significant collateral call from Merrill Lynch Mortgage Capital, Inc. ("Merrill
Lynch"). The basis for this collateral call, in the Company's view, was
unreasonable. After giving consideration to, among other things, this collateral
call and the Company's concern that its failure to satisfy this collateral call
would cause the Company to be in default under a substantial portion of its
financing arrangements, the Company reluctantly concluded on Sunday, October 4,
1998 that it was in the best interests of creditors, equity holders and other
parties in interest to seek chapter 11 protection.

On October 5, 1998, the Debtors filed for relief under chapter 11 of
the U.S. Bankruptcy Code.

While in bankruptcy, CRIIMI MAE has streamlined its operations. The
Company significantly reduced the number of employees in its origination and
underwriting operations in October 1998, but has retained a significant number
of key employees in each of these operational areas. In connection with these
reductions, the Company closed its five regional loan origination offices,
retaining only a core presence in Rockville, Boston, Houston, Chicago and San
Francisco. See "BUSINESS-Employees."

Although the Company has significantly reduced its work force, the
Company recognizes that retention of its executives and other remaining
employees is essential to the efficient operation of its business and to its
reorganization efforts. Accordingly, the Company has, with Bankruptcy Court
approval, adopted an employee retention plan. See "BUSINESS - Employee Retention
Plan."

See "GENERAL INFORMATION - Legal Proceedings" for a discussion of
bankruptcy related litigation and other matters.

RETENTION OF PROFESSIONALS BY THE DEBTORS

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<PAGE>

The Debtors have retained the following professionals to represent and
advise them in connection with their chapter 11 cases:

Reorganization Counsel:

Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Venable, Baetjer and Howard, LLP
Shulman, Rogers, Gandal, Pordy & Ecker, P.A.

Corporate Counsel:

Akin, Gump, Strauss, Hauer & Feld, L.L.P.
Venable, Baetjer and Howard, LLP

Restructuring Advisors:

Wasserstein, Perella & Co.

Independent Public Accountants:

Arthur Andersen LLP

Appointment of Official Committees

To date, three committees have been participating in these cases. The
members of the committees and their respective attorneys and advisors, as of the
date of the filing of this Disclosure Statement, are set forth below:

Unsecured Creditors' Committee of CMI:

Prudential Securities Credit Corporation
Riggs Bank, NA
Conseco Capital Management, Inc.
RER Resources L.P.

Attorney:

Arnold & Porter

Financial Advisors:

The Blackstone Group

Accountants:

PricewaterhouseCoopers LLP

Equity Securityholders' Committee:

Charles Koehler
Michael Wurst
Elliot Kapstein

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<PAGE>

Howard Landis
Saul Yarmak

Attorney:

Covington & Burling

Financial Advisor:

Ernst & Young LLP

Unsecured Creditors' Committee of CMM:

Dunn and Bradstreet
Andrews Office Products
Ad Solution

Attorney:

Whiteford, Taylor & Preston

Financial Advisor:

Penta Advisory Services, LLC

OTHER RELIEF GRANTED

In addition to obtaining Bankruptcy Court orders in connection with
proceedings involving creditors and an employee retention plan (also addressing
assumption of certain employment agreements) as discussed in "GENERAL
INFORMATION - Legal Proceedings," "GENERAL INFORMATION - Business - Employee
Retention Plan," and "GENERAL INFORMATION - Management - Executive
Compensation," the Debtors, in conjunction with filing their petitions, filed
various other motions seeking orders that were entered by the Bankruptcy Court.
The relief sought included:

Application for Authority to Pay Prepetition Trade Creditors in the
Ordinary Course: The Debtors obtained authority from the Bankruptcy Court to pay
Trade Claims in the ordinary course of their business with respect to those
vendors that continued to ship goods on customary trade terms.

Assumption and Rejection of Executory Contracts and Unexpired Leases.
Since the Petition Date, the Debtors have undertaken a comprehensive review and
evaluation of their various unexpired real property leases and various executory
contracts. Based on this review and because of the substantial downsizing of the
Debtors' business, the Debtors have rejected five leases of real property and 21
equipment leases and equipment maintenance and service contracts. In the event
the Debtors determine, in their business judgment, that they no longer need
other leases and contracts, the Debtors will file the appropriate motion(s) to
reject such leases or contracts with the Bankruptcy Court, or such leases or
contracts will be deemed rejected in the Plan.

DEADLINE TO FILE PROOFS OF CLAIM

On October 7, 1998, the Clerk of the Bankruptcy Court (the "Clerk of
the Court") issued a notice (the "Bar Date Notice") setting February 14, 1999,
(the "Bar Date"), as the date and time by which proofs of claim of
non-governmental units against the Debtors' chapter 11 estates had to be filed.
Governmental units were given until

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<PAGE>

April 3, 1999 (the "Government Unit Bar Date") to file such proofs. The Bar Date
Notice required each person or entity (including, without limitation, each
individual, partnership, joint venture, corporation, estate, trust and
governmental unit) that asserted a "claim" (as such term is defined in Section
101(5) of the Bankruptcy Code) against any or all of the Debtors which claim
arose on or prior to the Petition Date to file an original written proof of
claim so as to be received on or before the Bar Date or the Government Unit Bar
Date, as applicable, in each case at 5:00 p.m. by the Clerk of the Court. The
Bar Date Notice further provided that if a claim is listed on the schedule of
claims filed by the Debtors with the Bankruptcy Court and is not listed as
disputed, contingent or unliquidated, the claim will be allowed only in the
amount scheduled unless the claimant files a proof of claim by the Bar Date or
the Government Unit Bar Date, as applicable, and that if a claim is not listed
on the schedule of claims filed by the Debtors with the Bankruptcy Court or if a
claim is listed as disputed, contingent or unliquidated, the claimant must file
a proof of claim with the Bankruptcy Court by the Bar Date or the Government
Unit Bar Date, as applicable, or the claimant may not be able to recover on its
claim against the Debtors' chapter 11 estates.

More than 850 claims with a face amount of approximately $2.5 billion
have been filed in these cases. The Debtors scheduled liabilities of
approximately $1.18 billion. The Debtors and The Debtors' counsel have devoted
substantial effort to reducing the total amount of allowed claims. In connection
with an extensive claims analysis they have: (a) established a detailed
database; (b) prepared objections to claims; and (c) undertaken extensive
negotiations with creditors regarding reduction or withdrawal of claims.

These efforts have resulted in the disallowance, withdrawal, or
agreement to withdraw approximately $1.4 billion in claims to date. This process
has led to the resolution of almost all employee, real and personal property
lease rejection, broker and borrower claims. Except as set forth below, CMI
anticipates only a few remaining claims disputes in these areas.

Three large disputed claims remain unresolved: (a) the claim of Andrew
N. Friedman on behalf of a class of shareholders in the amount of $100 million
(the "Friedman Claim"); (2) the claim of the Capital Corporation of America, LLC
for approximately $17 million (the "CCA Claim"); and (3) the claim of GP
Properties Group, Inc., for approximately $882,000 (the "GP Properties Claim").

The Friedman claims relates to shareholder litigation against CMI's
officers and directors, which is discussed in "GENERAL INFORMATION - Legal
Proceedings."

The CCA Claim relates to an August 1998 letter of intent between CMI
and CCA for the purchase of subordinated CMBS. The letter of intent included
financing and due diligence contingencies. CMI's position is that neither of
these contingencies was fulfilled. After preliminary due diligence, CMI
expressed concern regarding the quality of the mortgage loans underlying the
CMBS. CMI's further due diligence confirmed this preliminary view, and CMI
exercised its right not to go forward with the purchase because of its due
diligence concerns. CCA refused to withdraw its claim, and on September 1, 1999,
CMI filed an objection to the CCA Claim. On October 9, 1999, CCA responded to
the objection. The matter is now pending before the Bankruptcy Court.

The GP Properties Claim relates to CMI's loan origination program. In
August and September 1998, CMI and GP Properties were involved in the
preliminary loan application process. These preliminary steps did not give rise
to a loan commitment. On October 7, 1998, GP Properties advised CMI that it
closed on alternative lending. GP Properties refused CMI's request that it
withdraw its claim, and on October 26, 1999, CMI objected to the GP Properties
Claim. GP Properties did not respond to the objection on or prior to the
objection deadline. On December 16, 1999, CMI filed a submission asking the
Bankruptcy Court to disallow the GP Properties Claim.

The Debtors estimate the principal amount of allowed unsecured claims
will be approximately $195 million and allowed secured claims will be
approximately $760 million, subject to agreed sales of certain collateral.

APPOINTMENT OF SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS OF CMI

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<PAGE>

In May 1999, a Special Reorganization Committee of the Board of
Directors was established to evaluate proposals received from major financial
institutions for private equity investments that would be part of a plan of
reorganization. The Committee, composed of the Company's four outside directors,
was also assigned the responsibility of overseeing the ongoing development of
the entire plan of reorganization under which the Company could emerge from
chapter 11. Robert E. Woods was appointed Lead Director of the Committee. Mr.
Woods is Managing Director and head of loan syndications for the Americas at
Societe Generale. Prior to that, he was Managing Director and head of the Real
Estate Capital Markets and Mortgage-Backed Securities Division of Citicorp.

PAYMENT OF NON-CASH DIVIDEND TO COMMON SHAREHOLDERS

On September 14, 1999, the Company declared a dividend to common
shareholders of approximately 1.61 million shares of a new series of junior
convertible preferred stock with a face value of $10 per share. The Company paid
the junior preferred stock dividend on November 5, 1999. Dividends are payable,
at a rate of 12% per annum, in cash except to the extent that continued
qualification as a real estate investment trust requires payment of dividends in
shares. The payment of the first dividend will be paid no earlier than the end
of the calendar quarter (March 31, June 30, September 30, December 31) in which
the Company's Plan becomes effective and thereafter not more than quarterly, as
determined by the Board of Directors. See "Effect of Chapter 11 Filing on REIT
Status and Other Tax Matters -- The Company's 1998 Taxable Income."

B. BUSINESS

GENERAL

CRIIMI MAE is a fully integrated commercial mortgage company structured
as a self-administered real estate investment trust ("REIT"). Prior to the
filing by CRIIMI MAE Inc. (unconsolidated) and two of its operating subsidiaries
filed for relief under chapter 11 of the U.S. Bankruptcy Code on the Petition
Date as described below, CRIIMI MAE's primary activities included (i) acquiring
non-investment grade securities (rated below BBB- or unrated) backed by pools of
commercial mortgage loans on multifamily, retail and other commercial real
estate ("Subordinated CMBS"), (ii) originating and underwriting commercial
mortgage loans, (iii) securitizing pools of commercial mortgage loans and
resecuritizing pools of Subordinated CMBS, and (iv) through the Company's
servicing affiliate, CRIIMI MAE Services Limited Partnership ("CMSLP"),
performing servicing functions with respect to the mortgage loans underlying the
Company's Subordinated CMBS.

Since filing for chapter 11 protection, CRIIMI MAE has suspended its
Subordinated CMBS acquisition, origination and securitization programs. The
Company continues to hold a substantial portfolio of Subordinated CMBS,
originated loans and mortgage securities and, through CMSLP, acts as a servicer
for its own as well as third party securitized mortgage loan pools.

In addition to the two operating subsidiaries which filed for chapter
11 protection with the Company, the Company owns 100% of multiple financing and
operating subsidiaries as well as various interests in other entities (including
CMSLP) which either own or service mortgage and mortgage-related assets (the
"Non-Debtor Affiliates"). See Note 3 to Notes to Consolidated Financial
Statements. None of the Non-Debtor Affiliates has filed for bankruptcy
protection.

The Company was incorporated in Delaware in 1989 under the name CRI
Insured Mortgage Association, Inc. ("CRI Insured"). In July 1993, CRI Insured
changed its name to CRIIMI MAE Inc. and reincorporated in Maryland. In June
1995, certain mortgage businesses affiliated with C.R.I., Inc. were merged into
CRIIMI MAE (the "Merger"). The Company is not a government sponsored entity or
in any way affiliated with the United States government or any United States
government agency. The Company's principal executive offices are located at
11200 Rockville Pike, Rockville, Maryland 20852 and its telephone number is
(301) 816-2300.

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<PAGE>

EFFECT OF CHAPTER 11 FILING ON REIT STATUS AND OTHER TAX MATTERS

REIT STATUS. CRIIMI MAE is required to meet income, asset, ownership
and distribution tests to maintain its REIT status. The Company has satisfied
the REIT requirements for all years through, and including, 1998. However, due
to the uncertainty resulting from its chapter 11 filing, there can be no
assurance that CRIIMI MAE will retain its REIT status for 1999 or subsequent
years. If the Company fails to retain its REIT status for any taxable year, it
will be taxed as a regular domestic corporation subject to federal and state
income tax in the year of disqualification and for at least the four subsequent
years.

THE COMPANY'S 1999 TAXABLE INCOME. As a REIT, CRIIMI MAE is generally
required to distribute at least 95% of its "REIT taxable income" to its
shareholders each tax year. For purposes of this requirement, REIT taxable
income excludes certain excess noncash income such as original issue discount
("OID"). In determining its federal income tax liability, CRIIMI MAE, as a
result of its REIT status, is entitled to deduct from its taxable income
dividends paid to its shareholders. Accordingly, to the extent the Company
distributes its net income to shareholders, it effectively reduces taxable
income, on a dollar-for-dollar basis, and eliminates the "double taxation" that
normally occurs when a corporation earns income and distributes that income to
shareholders in the form of dividends. The Company, however, still must pay
corporate level tax on any 1999 taxable income not distributed to shareholders.
Unlike the 95% distribution requirement, the calculation of the Company's
federal income tax liability does not exclude excess noncash income such as OID.
Should CRIIMI MAE terminate or fail to maintain its REIT status during the year
ended December 31, 1999, the tax liability on the taxable income for the nine
months ended September 30, 1999 of approximately $13.7 million would be
approximately $5.5 million.

In determining the Company's taxable income for 1999, distributions
declared by the Company on or before September 15, 2000 and actually paid by the
Company on or before December 31, 2000 will be considered as dividends paid for
the 1999 year. The Company anticipates distributing a substantial portion of its
1999 taxable income in the form of non-cash taxable dividends. There can be no
assurance that the Company will be able to make distributions with respect to
its 1999 taxable income.

1999 EXCISE TAX LIABILITY. Apart from the requirement that the Company
distribute at least 95% of its REIT taxable income to maintain REIT status,
CRIIMI MAE is also required each calendar year to distribute an amount at least
equal to the sum of 85% of its "REIT ordinary income" and 95% of its "REIT
capital gain income" to avoid incurring a nondeductible excise tax. Unlike the
95% distribution requirement, the 85% distribution requirement is not reduced by
excess noncash income items such as OID. In addition, in determining the
Company's excise tax liability, only dividends actually paid in 1999 will reduce
the amount of income subject to this excise tax. The Company has accrued
$475,000 for the excise tax payable for 1999 in anticipation that 1999 taxable
income will not be distributed to shareholders until 2000. The accrual was
calculated based on the taxable income for the first nine months of 1999.
Additional excise tax will be accrued in the fourth quarter related to fourth
quarter taxable income.

THE COMPANY'S 1998 TAXABLE INCOME. On September 14, 1999, the Company
declared a dividend payable to common shareholders of approximately 1.61 million
shares of a new series of junior convertible preferred stock with a face value
of $10 per share. The purpose of the dividend was to distribute approximately
$15.7 million in undistributed 1998 taxable income. To the extent that it is
determined that such amount is not distributed, the Company would bear a
corporate level income tax on the undistributed amount. There can be no
assurance that all of the Company's tax liability will be eliminated by payment
of such junior preferred stock dividend. The Company paid the junior preferred
stock dividend on November 5, 1999. The junior preferred stock dividend is
taxable to common shareholder recipients.

THE CMBS MARKET

Historically, traditional lenders, including commercial banks,
insurance companies and savings and loans, have been the primary holders of
commercial mortgages. The real estate market of the late 1980s and early 1990s
created business and regulatory pressure to reduce the real estate assets held
on the books of these institutions. As a result, there has been significant
movement of commercial real estate debt from private institutional holders to
the

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<PAGE>

public markets. Consequently, the supply of private sector multifamily and other
CMBS has increased dramatically over recent years. According to COMMERCIAL
MORTGAGE ALERT, CMBS issuance's in the U.S. equaled approximately $78.3 billion
in 1998 compared to approximately $44.3 billion in 1997, $30.0 billion in 1996
and $19.0 billion in 1995.

CMBS are generally created by pooling commercial mortgage loans and
directing the cash flow from such mortgage loans to various tranches of
securities. The tranches consist of investment grade (AAA to BBB-),
non-investment grade (BB+ to C) and unrated. The first step in the process of
creating CMBS is loan origination. Loan origination occurs when a financial
institution lends money to a borrower to refinance or to purchase a commercial
real estate property, and secures the loan with a mortgage on the property that
the borrower owns or purchases. Commercial mortgage loans are typically
non-recourse to the borrower. A pool of these commercial real estate-backed
mortgage loans is then accumulated, often by a large commercial bank or other
financial institution. One or more rating agencies then analyze the loans and
the underlying real estate to determine their credit quality. The mortgage loans
are then deposited into an entity that is not subject to taxation, often a real
estate mortgage investment conduit ("REMIC") or, in the case of the Company, a
TMP. The investment vehicle then issues securities backed by the commercial
mortgage loans, or CMBS.

The CMBS are divided into tranches, which are afforded certain priority
rights to the cash flow from the underlying mortgage loans. Interest payments
typically flow first to the most senior tranche until it receives all of its
accrued interest and then to the junior tranches in order of seniority until all
available interest is exhausted. Principal payments typically flow first to the
most senior tranche until it is retired. Tranches are then retired in order of
seniority, based on available principal. Losses, if any, are generally first
applied against the principal balance of the lowest rated or unrated tranche.
Losses are then applied in reverse order of seniority. Each tranche is assigned
a credit rating by one or more rating agencies based on the agencies' assessment
of the likelihood of the tranche receiving its stated right to payment of
principal. The CMBS are then sold to investors through either a public offering
or a private placement. The Company has primarily focused on acquiring or
retaining non-investment grade and unrated tranches, issued by mortgage
conduits, where the Company believes its market knowledge and real estate
expertise allow it to earn attractive risk-adjusted returns.

At the time of a securitization, one or more entities are appointed as
"servicers" for the pool of mortgage loans, and are responsible for performing
servicing duties which include collecting payments and monitoring performance
(master or direct servicing), and working out or foreclosing on defaulted loans
(special servicing). Each servicer receives a fee and other financial incentives
based on the type and extent of servicing duties.

The CMBS market was adversely affected by the turmoil which occurred in
the capital markets commencing in late summer of 1998 that caused spreads
between CMBS yields and the yields on U.S. Treasury securities with comparable
weighted average lives to widen, resulting in a decrease in the value of CMBS.
As a result, the creation of new CMBS and the trading of existing CMBS came to a
near standstill. In late November 1998, buying and trading activity in the CMBS
market began to recover, increasing liquidity in the CMBS market; however, these
improvements mostly related to investment grade CMBS. New issuances of CMBS also
returned in late November 1998 and have continued throughout 1999. The market
for Subordinated CMBS has, however, been slower to recover. It is difficult, if
not impossible, to predict when or if the CMBS market and, in particular, the
Subordinated CMBS market, will fully recover. Even if the market for
subordinated CMBS fully recovers, the liquidity of such market has historically
been limited. Additionally, during adverse market conditions, the liquidity of
such market has been severely limited. Therefore, management's estimate of the
value of the Company's CMBS could vary significantly from the value that could
be realized in a current transaction between a willing buyer and a willing
seller in other than a forced sale or liquidation.

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<PAGE>

SUBORDINATED CMBS ACQUISITIONS

As of December 31, 1998 and September 30, 1999, the Company's $2.4
billion portfolio of assets included $1.3 billion and $1.2 billion,
respectively, of Subordinated CMBS (representing approximately 52% and 52%,
respectively, of the Company's total consolidated assets). See CRIIMI MAE
Financial Statements to be attached hereto as Exhibit D.

In 1998, CRIIMI MAE acquired Subordinated CMBS from offerings with a
total face amount of $13.5 billion. These offerings comprised 17.2% of the total
($78.3 billion face amount according to COMMERCIAL MORTGAGE ALERT) CMBS market
for 1998. For the year ended December 31, 1998, the Company acquired
Subordinated CMBS with an aggregate face amount of approximately $1.2 billion,
making the Company a leading purchaser of Subordinated CMBS in 1998. As of
December 31, 1998, approximately 44% of the Company's CMBS (based on fair value)
were rated BB+, BB or BB-, 27% were B+, B, B- or CCC and 9% were unrated. The
remaining approximately 20% represents investment grade securities that the
Company reflects on its balance sheet as a result of CBO-2 (herein defined). See
"THE PORTFOLIO - CMBS."

The Company generally acquired Subordinated CMBS in privately
negotiated transactions, which allowed it to perform due diligence on a
substantial portion of the mortgage loans underlying the Subordinated CMBS as
well as the underlying real estate prior to consummating the purchase. In
connection with its Subordinated CMBS acquisitions, the Company targeted
diversified mortgage loan pools with a mix of property types, geographic
locations and borrowers. CRIIMI MAE financed a substantial portion of its
Subordinated CMBS acquisitions with short-term, variable-rate financing
facilities secured by the Company's CMBS. The Company's business strategy was to
periodically refinance a substantial portion of the Subordinated CMBS in its
portfolio through a resecuritization of such Subordinated CMBS primarily to
attain a better matching of the maturities of its liabilities and assets through
the refinancing of short-term, variable-rate, recourse financing with long-term,
fixed-rate, non-recourse financing. See "BUSINESS - Resecuritizations,"
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS," and Notes 5 and 9 to Notes to Consolidated Financial Statements.

The Company generally enters into interest rate protection agreements
to mitigate the adverse effects of rising short-term interest rates on its
variable-rate financing facilities. It is the Company's policy to hedge at least
75% of its variable-rate debt with interest rate protection agreements. As of
December 31, 1998 and September 30, 1999, approximately 79% and 91%,
respectively, of the Company's variable-rate debt was hedged with interest rate
caps, a form of interest rate protection agreement. Interest rate caps provide
protection to CRIIMI MAE to the extent interest rates, based on a readily
determinable interest rate index, increase above the stated interest rate cap,
in which case CRIIMI MAE would receive payments based on the difference between
the index and the cap. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" and Notes 9 and 10 to Notes to Consolidated
Financial Statements for a further discussion of the Company's short-term,
variable-rate, secured financing facilities and interest rate protection
agreements.

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<PAGE>

RESECURITIZATIONS

The Company initially funded a substantial portion of its Subordinated
CMBS acquisitions with short-term, variable-rate secured financing facilities.
To mitigate the Company's exposure to interest rate risk, among other things,
the Company's business strategy was to periodically refinance a significant
portion of this short-term debt with fixed-rate, non-recourse debt having
maturities that matched those of the Company's mortgage assets securing such
debt ("match-funded"). The Company effected such refinancing by pooling
Subordinated CMBS once a sufficient number of Subordinated CMBS had been
accumulated, and issuing newly created CMBS backed by the pooled Subordinated
CMBS. The CMBS issued in such resecuritizations were fixed-rate obligations with
maturities that matched the maturities of the Subordinated CMBS backing the new
CMBS. These resecuritizations also increased the amount of borrowings available
to the Company due to the increased collateral value of the new CMBS relative to
the pooled Subordinated CMBS. The increase in collateral value was principally
attributable to the seasoning of the underlying mortgage loans, and the
diversification that occurred when such Subordinated CMBS were pooled. The
Company generally used the cash proceeds from the investment-grade CMBS that
were sold in the resecuritization to reduce the amount of its short-term,
variable-rate secured borrowings. The Company then used the net excess borrowing
capacity created by the resecuritization to obtain new short-term, variable-rate
secured borrowings which were used with additional new short-term, variable-rate
secured borrowings typically provided by the Subordinated CMBS seller and, to a
lesser extent, cash, to purchase additional Subordinated CMBS. Although the
Company's resecuritizations have mitigated the Company's exposure to interest
rate risk through match-funding, the Company's short-term, variable-rate secured
borrowings increased from December 31, 1996 to December 31, 1998, as a result of
the Company's continued acquisitions of Subordinated CMBS.

In December 1996, the Company completed its first resecuritization of
Subordinated CMBS ("CBO-1") with a combined face value of approximately $449
million involving 35 individual securities collateralized by 12 mortgage
securitization pools. The Company sold, in a private placement, securities with
a face amount of $142 million and retained securities with a face amount of
approximately $307 million. Through CBO-1, the Company refinanced approximately
$142 million of short-term, variable-rate, secured borrowings with fixed-rate,
non-recourse, match-funded debt. CBO-1 generated excess borrowing capacity of
approximately $22 million primarily as a result of a higher overall weighted
average credit rating for the new CMBS, as compared to the weighted average
credit rating on the related CMBS collateral.

In May 1998, the Company completed its second resecuritization of
Subordinated CMBS ("CBO-2") with a combined face value of approximately $1.8
billion involving 75 individual securities collateralized by 19 mortgage
securitization pools and three of the retained securities from CBO-1. In CBO-2,
the Company initially sold in a private placement securities with a face amount
of $468 million and retained securities with a face amount of approximately $1.3
billion. Through CBO-2, the Company refinanced approximately $468 million of
short-term, variable-rate secured borrowings with fixed-rate, non-recourse,
match-funded debt. CBO-2 generated net excess borrowing capacity of
approximately $160 million primarily as a result of a higher overall weighted
average credit rating for the new CMBS, as compared to the weighted average
credit rating on the related CMBS collateral. See "GENERAL INFORMATION - Legal
Proceedings" regarding the sale of additional CBO-2 CMBS.

As of December 31, 1998 and September 30, 1999, the Company's total
debt was approximately $2.1 billion and $2.0 billion, respectively, of which
approximately 46% and 53%, respectively, was fixed-rate, match-funded debt and
approximately 54% and 47%, respectively, was short-term, variable-rate or
fixed-rate debt that was not match-funded and recourse to the Company. For the
year and nine months ended December 31, 1998 and September 30, 1999, the
Company's weighted average cost of borrowing (including amortization of
discounts and deferred financing fees of approximately $6.5 million and $6.7
million, respectively) was approximately 7.37% and 7.39%, respectively. See
"BUSINESS - Subordinated CMBS Acquisitions," "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS" and Notes 5, 9 and 10
to Notes to Consolidated Financial Statements for further information regarding
the Company's resecuritizations, short-term variable-rate secured financings,
and caps.

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<PAGE>

LOAN ORIGINATIONS AND SECURITIZATIONS

Prior to the Petition Date, the Company originated mortgage loans
principally through mortgage loan conduit programs with major financial
institutions for the primary purpose of pooling such loans for securitization.
The Company viewed a securitization as a means of extracting the maximum value
from the mortgage loans originated. A portion of the mortgage loans originated
was financed through the creation and sale of investment-grade CMBS to third
parties in connection with the securitization. The Company received net cash
flow on the CMBS not sold to third parties after payment of amounts due to
secured creditors who had provided acquisition financing. Additionally, the
Company received origination and servicing fees related to the mortgage loan
conduit programs.

A majority of the mortgage loans originated under the Company's loan
conduit programs were "No Lock" mortgage loans. Unlike most commercial mortgage
loans originated for the CMBS market which contain "lock-out" clauses (that is,
provisions which prohibit the prepayment of a loan for a specified period after
the loan is originated or impose costly yield maintenance provisions), the
Company's No Lock loans allowed borrowers the ability to prepay loans at any
time by paying a predetermined prepayment penalty. Since the inception of these
origination programs, the Company has originated over $900 million in aggregate
principal amount of loans and securitized approximately $496 million in
aggregate principal amount of mortgage loans.

In June 1998, the Company securitized approximately $496 million of the
commercial mortgage loans originated or acquired through a mortgage loan conduit
program with Citibank, and through CRIIMI MAE CMBS Corp., issued Commercial
Mortgage Loan Trust Certificates, Series 1998-1 ("CMO-IV"). A majority of these
mortgage loans were "No Lock" loans. In CMO-IV, CRIIMI MAE initially sold $397
million face amount of fixed-rate, investment-grade CMBS. The Company originally
intended to sell all of the investment grade tranches of CMO-IV; however, the
sale of these bonds did not occur until 1999. See "GENERAL INFORMATION Legal
Proceedings" regarding the sale of additional CMO-IV securities. CRIIMI MAE has
call rights on each of the issued securities and therefore has not surrendered
control of the bonds, thus requiring the transaction to be accounted for as a
financing of the mortgage loans collateralizing the investment-grade CMBS sold
in the securitization. See "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS-Liquidity and Capital Resources" and Note 6
to Notes to Consolidated Financial Statements for additional information
regarding this securitization.

At the time it filed for bankruptcy, the Company had a mortgage loan
conduit program with Citibank (the "Citibank Program") as well as a loan conduit
program with Prudential Securities Incorporated and Prudential Securities Credit
Company (the "Prudential Program") (together the "Programs").

The Citibank Program provided for CRIIMI MAE to pay to Citibank the
face value of the loans originated through the Program, which were funded by
Citibank and not otherwise securitized, plus or minus any hedging loss or gain,
on December 31, 1998. To secure this obligation, CRIIMI MAE was required to
deposit a portion of the principal amount of each originated loan in a reserve
account. At December 31, 1998, this reserve account was approximately $31.8
million and was subsequently applied to the Citibank obligation, as further
described below.

Under the Prudential Program, the Company had an option to pay to
Prudential Securities Incorporated and Prudential Securities Credit Company
(collectively "Prudential") the face value of the loan, plus or minus any
hedging loss or gain, at the earlier of June 30, 1999 or the date by which a
stated quantity of loans for securitization has been made. Under the Prudential
Program, the Company was required to fund a reserve account, which was
approximately $2 million. Since the Company was unable to exercise its option
under the Prudential Program, the Company forfeited the amount of the reserve
account. CRIIMI MAE is still in discussions with Prudential to sell the loan
originated under the Prudential Program. There can be no assurance that an
agreement will be reached with Prudential or, if reached, that such agreement
would be approved by the Bankruptcy Court.

On October 5, 1998, Citibank sent the Company a letter alleging that
the Company was in default under the Citibank Program and that it was
terminating the Citibank Program. The Company and Citibank negotiated a

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<PAGE>

Stipulation and Consent Order (the "Order"), entered by the Bankruptcy Court on
April 5, 1999, regarding the Citibank Program. The Order provided that Citibank
would, with CRIIMI MAE's cooperation, sell the loans originated under the
Citibank Program, provided that the sale resulted in CRIIMI MAE receiving
minimum net proceeds of not less than $3.5 million, after satisfying certain
amounts due to Citibank under the Citibank Program, from the amount held in the
reserve account. The minimum net proceeds provision could be waived by written
agreement of the Company, the Official Committee of Unsecured Creditors in the
Company's chapter 11 case (the "Unsecured Committee") and the Official Committee
of Equity Security Holders in the Company's chapter 11 case (the "Equity
Committee").

On August 5, 1999, all but three of the commercial loans originated
under the Citibank Program in 1998, were sold for gross proceeds of
approximately $308 million. The loans sold had an aggregate unpaid principal
balance of $339 million. As a result of the valuation received in the sale, the
Company recorded an additional $10.9 million unrealized loss in the second
quarter bringing its unrealized losses through June 30, 1999 to $35.3 million.
The unrealized losses recorded through June 30, 1999 also included an estimate
of losses (approximately $2 million) related to the three loans (unpaid
principal balance of $32.7 million) not sold. Prior to the actual sale of these
loans the Company had recorded its unrealized losses based on pricing data
received from Citibank. (See also Note 8 to Notes to Consolidated Financial
Statements regarding the impact of this transaction on tax basis income). On
September 16, 1999, the remaining three commercial loans originated under the
Citibank Program were sold resulting in approximately $1.1 million in additional
losses recognized in the third quarter of 1999 due to a decrease in the actual
proceeds received as compared to the estimated proceeds anticipated at June 30,
1999. Therefore, the total realized loss for the transaction was approximately
$36.3 million. In the case of each sale of the commercial loans, the minimum net
proceeds provision was waived by the Company, the Unsecured Committee and the
Equity Committee. For income tax purposes, the entire loss of $36.3 million was
recorded as a realized loss on the loan sale dates in the third quarter of 1999.

SERVICING

CRIIMI MAE conducts its mortgage loan servicing and advisory operations
through its affiliate, CMSLP. At the time of the chapter 11 filing, CMSLP was
responsible for certain servicing functions on a mortgage loan portfolio of
approximately $32 billion, as compared to approximately $16.5 billion as of
December 31, 1997. Prior to the Petition Date, CRIIMI MAE increased its mortgage
loan servicing and advisory operations primarily through its purchases of
Subordinated CMBS by acquiring certain servicing rights for the mortgage loans
collateralizing the Subordinated CMBS, as well as providing servicing on the
loans originated through the CRIIMI MAE loan origination programs. At the time
of the chapter 11 filing, CRIIMI MAE, through CMSLP, master serviced five CMBS
portfolios totaling $3.6 billion, as well as loans originated, but not yet
securitized, under its loan origination programs.

CMSLP did not file for protection under chapter 11. However, because of
the related party nature of its relationship with CRIIMI MAE, CMSLP has been
under a high degree of scrutiny from servicing rating agencies. As a result of
CRIIMI MAE's chapter 11 filing, CMSLP was declared in default under certain
credit agreements with First Union National Bank ("First Union"). In order to
repay all such credit agreement obligations and to increase its liquidity, CMSLP
arranged for ORIX Real Estate Capital Markets, LLC ("ORIX"), formerly known as
Banc One Mortgage Capital Markets, LLC to succeed it as master servicer on two
commercial mortgage pools on October 30, 1998. In addition, in order to allay
rating agency concerns stemming from CRIIMI MAE's chapter 11 filing, in November
1998, CRIIMI MAE designated ORIX as special servicer on 33 separate CMBS
securitizations totaling approximately $29 billion, subject to certain
requirements contained in the respective servicing agreements. CMSLP will
continue to perform special servicing as special sub-servicer for ORIX on all
but five of these securitizations. CRIIMI MAE remains the owner of the lowest
rated tranche of the related Subordinated CMBS and, as such, retains rights
pertaining to ownership, including the right to replace the special servicer.
CMSLP lost the right to specially service the DLJ MAC 95 CF-2 securitization
when the majority holder of the lowest rated tranches replaced CMSLP as special
servicer. As of September 30, 1999, CMSLP's remaining servicing portfolio was
$29.4 billion.

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<PAGE>

CMSLP's principal servicing activities are described below.

SPECIAL SERVICING. A special servicer typically provides asset
management and resolution services with respect to nonperforming or
underperforming loans within a pool of mortgage loans. When acquiring
Subordinated CMBS, CRIIMI MAE typically required that it retain the right to
appoint the special servicer for the related mortgage pools. When acting as
special servicer of a CMBS pool, CMSLP has the authority to deal directly with
any borrower that fails to perform under certain terms of its mortgage loan,
including the failure to make payments, and to manage any loan workouts and
foreclosures. As special servicer, CMSLP earns fee income on services provided
in connection with any loan servicing function transferred to it from the master
servicer. CRIIMI MAE believes that because it owns the lowest rated or unrated
tranche (first loss position) of the Subordinated CMBS, CMSLP has an incentive
to quickly resolve any loan workouts. During the year and nine months ended
December 31, 1998 and September 30, 1999, CMSLP successfully resolved $138.7 and
$175 million, respectively, of CMBS loan workouts. As of December 31, 1998 and
September 30, 1999, CMSLP was designated as the special servicer (or sub-special
servicer) for approximately 5,000 and 4,971 commercial mortgage loans,
respectively, representing an aggregate principal amount of approximately $27.4
and $27.0 billion, respectively. Such commercial mortgage loans represent
substantially all of the mortgage loans underlying CRIIMI MAE's Subordinated
CMBS portfolio.

As of September 30, 1999, CMSLP had a special servicer rating of "above
average" from Fitch IBCA and had been approved on a transactional basis by
Moody's Investors Service, Inc. ("Moody's") and Duff & Phelps Credit Rating Co.
However, CMSLP lost an "acceptable" special servicer rating by Standard & Poor's
("S&P") in October 1998 as a result of the chapter 11 filing of CRIIMI MAE.
Also, as a result of the chapter 11 filing, Fitch IBCA placed CMSLP's special
servicing rating on "rating watch."

MASTER SERVICING. A master servicer typically provides administrative
and reporting services to the trustee with respect to a particular issuance of
CMBS. Mortgage loans underlying CMBS generally are serviced by a number of
primary servicers. Under most master servicing arrangements, the primary
servicers retain primary responsibility for administering the mortgage loans and
the master servicer acts as an intermediary in overseeing the work of the
primary servicers, monitoring their compliance with the standards of the issuer
of the related CMBS and consolidating the servicers' respective periodic
accounting reports for transmission to the trustee. When acting as master
servicer of a CMBS pool, CMSLP has greater control over the mortgage assets
underlying its Subordinated CMBS, including the authority to (i) collect monthly
principal and interest payments (either from a direct servicer or directly from
borrowers) on loans comprising a CMBS pool and remit such amounts to the pool
trustee, (ii) oversee the performance of sub-servicers and (iii) report to
trustees. As master servicer, CMSLP is usually paid a fee and can earn float
income on the deposits it holds. In addition to this float and fee income, the
master servicer typically has more direct and regular contact with borrowers
than the special servicer. As of December 31, 1998 and September 30, 1999, CMSLP
remained master servicer on three CMBS portfolios representing commercial
mortgage loans with an aggregate principal amount of approximately $2.3 billion.

As of September 30, 1999, CMSLP had a master servicer rating of
"acceptable" from Fitch IBCA and had been approved on a transactional basis by
Moody's. However, CMSLP lost an acceptable master servicer rating from S&P in
October 1998 as a result of the chapter 11 filing of CRIIMI MAE. Also, as a
result of the chapter 11 filing, Fitch IBCA placed CMSLP's Master Servicer
rating on "rating watch".

DIRECT (OR PRIMARY) SERVICING. Direct (or primary) servicers typically
perform certain functions for the master servicer. Direct serviced loans are
those loans for which CMSLP collects loan payments directly from the borrower
(including tax and insurance escrows and replacement reserves). The loan
payments are remitted to the master servicer for the loan (which may be the same
entity as the direct servicer), usually on a fixed date each month. The direct
servicer is usually paid a fee to perform these services, and is eligible to
earn float income on the deposits held. In addition to this fee and float
income, the direct servicer, like the master servicer, typically has more direct
and regular contact with borrowers than the special servicer. As of December 31,
1998 and June 30, 1999, CMSLP was designated direct servicer for approximately
374 and 219 commercial mortgage loans, respectively, representing an aggregate
principal amount of approximately $2.1 billion and $920.8 million,

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<PAGE>

respectively. This number excludes loans that are both direct and master
serviced, which are included in the master servicing figures above.

LOAN MANAGEMENT. In certain cases, CMSLP acts as loan manager and
monitors the ongoing performance of properties securing the mortgage loans
underlying its Subordinated CMBS portfolio by continuously reviewing the
property level operating data and regular site inspections. For many of these
loans, CMSLP performs these duties directly; for the remaining loans, as part of
its routine asset monitoring process, it reviews the analysis performed by other
servicers. This allows CMSLP to identify and resolve potential issues that could
result in losses. As of December 31, 1998 and September 30, 1999, CMSLP served
as loan manager for approximately 4,800 and 4,760 commercial mortgage loans,
respectively, representing an aggregate principal amount of approximately $26.6
and $26.2 billion, respectively. This number excludes loans that are both direct
and master serviced which are included in the master servicing figures above.

UNDERWRITING PROCEDURES

CRIIMI MAE believes that its experience in underwriting has enabled it
to maintain the overall quality of assets underlying its CMBS portfolio and to
properly manage certain of the risks associated with mortgage loans underlying
acquired Subordinated CMBS and loan originations. Since the Company generally
acquired CMBS through privately negotiated transactions and originated
commercial mortgage loans through its regional offices, it was able to perform
extensive due diligence on each mortgage loan as well as the underlying real
estate prior to consummating any purchase or origination. The Company underwrote
every loan it originated and re-underwrote a substantial portion of the loans
underlying the Subordinated CMBS it acquired. Furthermore, the Company's credit
committee, composed of members of senior management, reviewed originated loans
and Subordinated CMBS acquisitions. The Company also placed underwriting
personnel in its regional origination offices, not only to provide a timely
response to the originators but also to achieve a thorough understanding of
local markets and demographic trends.

CRIIMI MAE's underwriting guidelines were designed to assess the
adequacy of the real property as collateral for the loan and the borrower's
creditworthiness. The underwriting process entailed a full independent review of
the operating records, appraisals, environmental studies, market studies and
architectural and engineering reports, as well as site visits to properties
representing a majority of the CMBS portfolio. The Company then tested the
historical and projected financial performance of the properties to determine
their resiliency to a market downturn and applied varying capitalization rates
to assess collateral value. To assess the borrower's creditworthiness, the
Company reviewed the borrower's financial statements, credit history, bank
references and managerial experience. The Company purchased Subordinated CMBS
when the loans it believed to be problematic (I.E., that did not meet its
underwriting criteria) were excluded from the CMBS pool and when satisfactory
arrangements existed that enabled the Company to closely monitor the underlying
mortgage loans and provided the Company with appropriate workout and foreclosure
rights.

EMPLOYEES

As of September 30, 1999, the Company had 58 full-time employees, and
CMSLP had 103 full-time employees. Prior to the Petition Date on September 30,
1998, the Company had 170 full-time employees, and CMSLP had 113 full-time
employees.

EMPLOYEE RETENTION PLAN

Upon commencement of the chapter 11 cases, the Company believed it was
essential to both the efficient operation of the Company's business and the
reorganization effort that the Company maintain the support, cooperation and
morale of its employees. The Company obtained Bankruptcy Court approval to pay
certain pre-petition employee obligations in the nature of wages, salaries and
other compensation and to continue to honor and pay all employee benefit plans
and policies.

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In addition, to ensure the Company's continued retention of its
executives and other employees and to provide meaningful incentives for these
employees to work toward the Company's financial recovery and reorganization,
the Company's management and Board of Directors developed a comprehensive and
integrated program to retain its executives and other employees throughout the
reorganization. On December 18, 1998, the Company obtained Bankruptcy Court
approval to adopt and implement an employee retention program (the "Employee
Retention Plan") with respect to all employees of the Company other than certain
key executives. On February 28, 1999, the Company received Bankruptcy Court
approval authorizing it to extend the Employee Retention Plan to the key
executives initially excluded, including modifying existing employment
agreements and entering into new employment agreements with such key executives.
The Employee Retention Plan permitted the Company to approve ordinary course
employee salary increases in March 1999, subject to certain limitations, and to
grant options to its employees after the Petition Date, up to certain limits.
The Employee Retention Plan also provides for retention payments aggregating up
to $3.5 million, including payments to certain executives. Retention payments
are payable semiannually over a two-year period. The first retention payment
vested on April 5, 1999, and was paid on April 15, 1999. The second retention
payment vested on October 5, 1999 and was paid on October 15, 1999. The entire
unpaid portion of the retention payments will become due and payable (i) upon
the effective date of a plan of reorganization of the Company and, with respect
to certain key executives, court approval or (ii) upon termination without
cause. William B. Dockser, Chairman of the Board of the Company, and H. William
Willoughby, President, are not currently entitled to receive any retention
payments. Subject to the terms of their respective employment agreements,
certain key executives will be entitled to severance benefits if they resign or
their employment is terminated following a change of control. The other
employees will be entitled to severance benefits if they are terminated without
cause subsequent to a change of control of the Company and CMM. In addition,
options granted by the Company after October 5, 1998 will, subject to Bankruptcy
Court approval, become exercisable upon a change of control. For a discussion of
the Employee Retention Plan as it relates to named key executives of the
Company, see "EXECUTIVE COMPENSATION - Employment Agreements."

C. THE PORTFOLIO

CMBS

FAIR VALUE

As of September 30, 1999, the Company owned CMBS rated from A to CCC
and Unrated with a total fair value amount of approximately $1.2 billion
(representing approximately 52% of the Company's total consolidated assets) and
an aggregate amortized cost of approximately $1.5 billion.

Amortized Amortized
Face Amount Face Value Cost Cost
as of Weighted as of Range of Discount as of as of
September 30, Averages Weighted September 30, Rates Used to September December
SECURITY 1999 Pass- Average 1999 Calculate 30, 1999 31, 1998
RATING (IN MILLIONS) THROUGH RATE LIFE (2) (IN MILLIONS)(1) FAIR VALUE (1) (IN MILLIONS) (IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
A (5) $ 62.6 7.0 % 7 years $ 54.2 9.8% $ 57.3 $ 57.0

BBB (5) 150.6 7.0% 12 years 116.8 10.4% 127.5 126.9

BBB-(5) 115.2 7.0% 13 years 82.8 11.3% 93.3 92.8

BB+ 394.6 7.0% 13 years 260.9 10.6% - 12.9% 319.7 317.9

BB 278.2 6.9% 14 years 200.7 11.2% - 13.4% 261.2 259.1

</TABLE>

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<PAGE>

<TABLE>

<S> <C> <C> <C> <C> <C> <C> <C>
BB- 89.1 6.8% 14 years 54.4 11.7% - 14.6% 73.0 72.6

B+ 128.7 6.7% 16 years 65.9 13.0% - 15.9% 93.4 93.0

B 300.2 6.6% 16 years 151.3 14.0% - 16.3% 210.4 208.9

B- 198.7 6.7% 17 years 86.5 15.2% - 19.0% 107.6 106.7

CCC 92.0 6.8% 19 years 24.0 24.0% - 29.0% 36.1 36.0

Unrated (6) 477.4 6.2% 20 years 118.5 25.0% - 30.0% 151.0 159.0
----- ---- ---------- ----- --------- --------
Total (3)(4) $ 2,287.3 6.7% 16 years $ 1,216.0 $ 1,530.5 $1,529.9
============ ==== ========== ========= ========= =========

</TABLE>

- ----------

(1) The estimated fair values of Subordinated CMBS represent the carrying value
of these assets. Due to the chapter 11 filing, the Company's lenders were not
willing to provide fair value quotes for the portfolio as of September 30, 1999
and December 31, 1998. As a result, the Company calculated the estimated fair
market value of its Subordinated CMBS portfolio as of September 30, 1999 and
December 31, 1998. The Company used a discounted cash flow methodology to
estimate the fair value of its Subordinated CMBS portfolio. The projected cash
flows used by the Company were based upon the same collateral cash flows used to
calculate the anticipated weighted average yields to maturity. The cash flows
were then discounted using a discount rate that, in the Company's view, was
commensurate with the market's perception of risk and value. The Company used a
variety of sources to determine its discount rate including:
institutionally-available research reports, and communications with dealers and
active Subordinated CMBS investors regarding the valuation of comparable
securities. Since the Company calculated the estimated fair market value of its
Subordinated CMBS portfolio as of September 30, 1999 and December 31, 1998, it
has disclosed in the table the range of discount rates by rating category used
in determining these fair market values.

The CMBS market was adversely affected by the turmoil which occurred in the
capital markets commencing in late summer of 1998 that caused spreads between
CMBS yields and the yields on U.S. Treasury securities with comparable weighted
average lives to widen, resulting in a decrease in the value of CMBS. As a
result, the creation of new CMBS and the trading of existing CMBS came to a near
standstill. In late November 1998, buying and trading activity in the CMBS
market began to recover, increasing liquidity in the CMBS market; however, these
improvements mostly related to investment grade CMBS. New issuances of CMBS also
returned in late November 1998 and have continued throughout 1999. The market
for Subordinated CMBS has, however, been slower to recover. It is difficult, if
not impossible, to predict when or if the CMBS market and, in particular, the
Subordinated CMBS market, will fully recover. Even if the market for
Subordinated CMBS fully recovers, the liquidity of such market has historically
been limited. Additionally, during adverse market conditions the liquidity of
such market has been severely limited. Therefore management's estimate of the
value of its securities could vary significantly from the value that could be
realized in a current transaction between a willing buyer and a willing seller
in other than a forced sale or liquidation.

(2) Weighted average life represents the weighted average expected life of the
Subordinated CMBS prior to consideration of losses, extensions or prepayments
other than those factored in the assumed prepayment rate used at the time of
acquisition.

(3) Refer to Note 8 to Notes to Consolidated Financial Statements for additional
information regarding the total face amount and purchase price of Subordinated
CMBS for tax purposes.

(4) Similar to the Company's other sponsored CMOs, CMO-IV, as described in Note
6 to Notes to the Consolidated Financial Statements, resulted in the creation of
CMBS, of which the Company sold certain tranches. Since the Company retained
call options on the sold bonds, the Company did not surrender control of the
assets for purposes of FAS 125 and thus the entire transaction is accounted for
as a financing and not as a sale. Since the transaction is recorded as a
financing, the Subordinated CMBS are not reflected in the Company's Subordinated
CMBS portfolio. Instead the mortgage assets are reflected in Investment in
Originated Loans on the balance sheet.

(5) In connection with CBO-2, $62.6 million (A rated) and $60.0 million (BBB
rated) face amount of investment grade securities were issued with call options
and $345 million (A rated) face amount were issued without call options. Since
the Company retained call options on certain sold bonds, the Company did not
surrender control of those assets pursuant to the requirements of FAS 125 and
thus these securities are accounted for as a financing and not a sale. Since the
transaction is recorded as a partial financing and a partial sale, CRIIMI MAE
has retained the securities with call options in its

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<PAGE>

Subordinated CMBS portfolio reflected on its balance sheet. In connection with
CBO-2, in May 1998 the Company initially retained $90.6 million (BBB rated) and
$115.2 million (BBB-rated) face amount of securities, with the intention to sell
the securities at a later date. Such sale occurred March 5, 1999. See below for
further discussion.

(6) The unrated bond from CBO-1 experienced an approximately $737,000 principal
write down due to a loss on the foreclosure of an underlying loan. Management
believes that the current loss estimates used to recognize income related to
this bond remain adequate to cover losses.

TYPE AND GEOGRAPHIC LOCATION OF LOANS

As of September 30, 1999 and December 31, 1998, the mortgage loans
underlying CRIIMI MAE's Subordinated CMBS portfolio were secured by properties
of the types and at the locations identified below:

SEPTEMBER 30, DECEMBER 31, SEPTEMBER DECEMBER 31,
PROPERTY 1999 1998 GEOGRAPHIC 30, 1999 1998
TYPE PERCENTAGE(1) PERCENTAGE(1) LOCATION(2) PERCENTAGE(1) PERCENTAGE(1)
- ---- ------------- ------------- ----------- ------------- -------------

<S> <C> <C> <C> <C> <C>
Multifamily...... 32% 31% California.......... 17% 16%
Retail........... 29% 28% Texas............... 14% 12%
Office........... 12% 15% Florida............. 8% 7%
Hotel............ 14% 13% Other(3)............ 61% 65%
---- ----
Other............ 13% 13% Total............ 100% 100%
--- ----- ==== ====
Total........ 100% 100%
==== =====

</TABLE>

(1) Based on a percentage of the total unpaid principal balance of the
underlying loans.
(2) No significant concentration by region.
(3) No other individual state makes up more than 5% of the total.

CMBS POOLS. The following table summarizes information relating to the
Company's CMBS on an aggregate basis by pool as of September 30, 1999. See also
Note 5 to Notes to Consolidated Financial Statements.

Original September 30, 1999
Anticipated Anticipated
Unleveraged Unleveraged
Yield to Yield to
POOL (3) Maturity (1) Maturity (1)(2)
- -------- ------------ ---------------
<S> <C> <C>
Retained Securities from
CRIIMI 1996 C1 (CBO-1) 19.5% 20.7%(5)

DLJ Mortgage Acceptance Corp.
Series 1997 CF2 Tranche B-30C 8.2% 8.2%

Nomura Asset Securities Corp.
Series 1998-D6 Tranche B7 12.0% 12.0%

Retained Securities from
CRIIMI 1998 C1 (CBO-2) 10.3% 10.1%(4)

Mortgage Capital Funding, Inc.
Series 1998-MC1 8.9% 9.0%

</TABLE>

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<PAGE>

<TABLE>

<S> <C> <C>
Chase Commercial Mortgage Securities
Series 1998-1 8.8% 8.8%

First Union/Lehman Brothers
Series 1998 C2 8.9% 9.0%

Morgan Stanley Capital Inc.
Series 1998-WF2 8.5% 8.6%(4)

Mortgage Capital Funding, Inc.
Series 1998-MC2 8.7% 8.7%

Weighted Average 9.7%(3) 10.1%(3)

</TABLE>

- ----------

(1) Represents the anticipated weighted average unleveraged yield over the
expected average life of the Company's Subordinated CMBS portfolio as of the
date of acquisition and September 30, 1999, respectively, based on management's
estimate of the timing and amount of future credit losses and prepayments. As
discussed in (4) below, these yields may decrease as a result of certain
adversarial actions taken by the Company's lenders.

(2) Unless otherwise noted, changes in the September 30, 1999 anticipated yield
to maturity from that originally anticipated are primarily the result of changes
in prepayment assumptions relating to mortgage collateral.

(3) CRIIMI MAE, through CMSLP, performs servicing functions on a total CMBS pool
of approximately $ 29.4 billion. Of the $29.4 billion of mortgage loans,
approximately $260.6 million are being specially serviced as of November 1,
1999, of which approximately $121.1 million are being specially serviced due to
payment default and the remainder are being specially serviced due to
nonfinancial covenant default. CMSLP, to date has resolved and transferred out
of special servicing approximately $422.3 million of the approximately $682.9
million that has been transferred into special servicing. To date, actual losses
on mortgage loans underlying the CMBS transactions are lower than the Company's
original loss estimates.

(4) On October 6, 1998, Morgan Stanley and Co. International Limited ("Morgan
Stanley") advised CRIIMI MAE that it was exercising alleged ownership rights
over certain classes of CMBS it held as collateral. In the first quarter of
1999, the Company agreed to cooperate in selling two classes of investment grade
CMBS issued by CRIIMI MAE Commercial Mortgage Trust Series 1998-C1 (CBO-2 BBB
Bonds) and to suspend litigation with Morgan Stanley with respect to these CMBS.
On March 5, 1999, the CBO-2 BBB Bonds with $205.8 million face amount and with a
coupon rate of 7% were sold in a transaction that is accounted for as a
financing by the Company rather than a sale. Of the $159 million in proceeds,
$141.2 million was used to repay amounts due under the agreement with Morgan
Stanley, and $17.8 million was paid to CRIIMI MAE. CRIIMI MAE and Morgan Stanley
also agreed to a standstill period, now extended through January 17, 2000,
regarding seven classes of subordinated CMBS known as Morgan Stanley Capital I
Inc. Series 1998-WF2 (the "Wells Fargo Bonds"). At the end of this standstill
period, Morgan Stanley has until January 27, 2000 to respond to the Company's
complaint and resume litigation with respect to the Wells Fargo Bonds, unless
the standstill period is further extended by the parties or an agreement between
the parties is reached.

(5) The increase in the anticipated yield resulted from the reallocation of
CBO-1 asset basis in conjunction with the CBO-2 resecuritization.

INSURED MORTGAGE SECURITIES

As of September 30, 1999, the Company had $410.4 million (at fair
value) invested in mortgage securities and insured loans, consisting of GNMA
Mortgage-Backed Securities and FHA-Insured Loans, as well as Federal Home Loan
Mortgage Corporation ("Freddie Mac") participation certificates that are
collateralized by GNMA Mortgage-Backed Securities. As of September 30, 1999,
approximately 15% of CRIIMI MAE's investment in mortgage securities were
FHA-Insured Certificates and 85% were GNMA Mortgage-Backed Securities (including

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<PAGE>

certificates that collateralize Freddie Mac participation certificates). See
Notes 1 and 7 to Notes to Consolidated Financial Statements.

INVESTMENT IN ORIGINATED LOANS

As of September 30, 1999, the Company had $481.5 million (at amortized
cost) invested in commercial mortgage loans primarily originated through the
Company's mortgage loan conduit programs and subsequently securitized in CMO-IV.
Because the bonds sold in CMO-IV are subject to certain call options, under FAS
125, the entire transaction is accounted for as a financing instead of a sale
and the mortgage loans are reflected on the Company's balance sheet. See
"BUSINESS-Loan Originations and Securitizations" and Notes 1 and 6 to Notes to
Consolidated Financial Statements.

As of September 30, 1999 and December 31, 1998, the originated mortgage
loans were secured by properties of the types and at the locations identified
below:

September 30, December, 31, September 30, December 31,
1999 1998 1999 1998
Property Type Percentage(1) Percentage(1) Geographic Location(2) Percentage(1) Percentage(1)
- ------------- ------------- ------------- ---------------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
Multifamily..................... 38% 38% Michigan........................ 20% 20%
Hotel........................... 26% 26% Texas........................... 8% 8%
Retail.......................... 20% 20% Illinois........................ 7% 7%
Office.......................... 11% 11% California...................... 6% 6%
Other........................... 5% 5% Maryland........................ 6% 6%
------- ---------- Connecticut..................... 6% 6%
Total....................... 100% 100% Florida 5% 5%
===== ======== Other(3)........................ 42% 42%
---- ---
Total....................... 100% 100%
==== ====

</TABLE>

- ----------

(1) Based on a percentage of the total unpaid principal balance of the loans.
(2) No significant concentration by region.
(3) No other state makes up more than 5% of the total.

EQUITY INVESTMENTS

As of September 30, 1999, the Company had approximately $37.4 million in
investments accounted for under the equity method of accounting. Included in
equity investments are (a) CRIIMI, Inc., a wholly owned subsidiary of CRIIMI
MAE, which owns all of the general partnership interests in American Insured
Mortgage Investors L.P., American Insured Mortgage Investors Series 85
L.P.-American Insured Mortgage Investors L.P.-Series 86 and American Insured
Mortgage Investors L.P.-Series 88 (collectively the "AIM Funds"), (b) CRIIMI MAE
and CMM each own 50% of the limited partnership interest that owns a 20% limited
partnership interest in the adviser to the AIM Funds, (c) CRIIMI MAE's interest
in CRIIMI MAE Services Inc., and (d) CRIIMI MAE's interest in CMSLP. See Note 1
to Notes to Consolidated Financial Statements.

PROPERTIES

CRIIMI MAE leases its corporate offices at 11200 Rockville Pike,
Rockville, Maryland. As of September 30, 1999, these offices occupy
approximately 68,500 square feet.

D. LEGAL PROCEEDINGS

BANKRUPTCY PROCEEDINGS

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<PAGE>

On the Petition Date, the Debtors each filed voluntary petitions for
relief under chapter 11 of the Bankruptcy Code in the Bankruptcy Court. These
cases are being jointly administered for procedural purposes. None of the cases
has been substantively consolidated. Under the Bankruptcy Code, the Debtors are
authorized to manage their respective affairs and operate their businesses as
debtors-in-possession while they attempt to confirm and consummate their Amended
Joint Plan of Reorganization that will restructure their financial affairs and
allow them to emerge from bankruptcy. As a debtor-in-possession under the
Bankruptcy Code, no Debtor may engage in any transaction outside the ordinary
course of business without the approval of the Bankruptcy Court. The following
discussion describes certain aspects of the Chapter 11 cases of the Debtors (the
"Chapter 11 Cases"), but it is not intended to be a complete summary.

Pursuant to the Bankruptcy Code, the commencement of the Chapter 11
Cases created an automatic stay, applicable generally to creditors and other
parties in interest, but subject to certain limited exceptions, of: (i) the
commencement or continuation of judicial, administrative or other actions or
proceedings against the Debtors that were or could have been commenced prior to
the commencement of the Chapter 11 Cases; (ii) the enforcement against the
Debtors or their property of any judgments obtained prior to the commencement of
the Chapter 11 Cases; (iii) the taking of any action to obtain possession of
property of the Debtors or to exercise control over such property; (iv) the
creation, perfection or enforcement of any lien against the property of the
bankruptcy estates of the Debtors; (v) any act to create, perfect or enforce
against the property of the Debtors any lien that secures a claim that arose
prior to the commencement of the Chapter 11 Cases; (vi) the taking of any action
to collect, assess or recover claims against the Debtors that arose before the
commencement of the Chapter 11 Cases; (vii) the set-off of any debt owing to the
Debtors that arose prior to the commencement of the Chapter 11 Cases against any
claim against the Debtors; or (viii) the commencement or continuation of a
proceeding before the United States Tax Court concerning the Debtors. Any entity
may apply to the Bankruptcy Court, upon appropriate showing of cause, for relief
from the automatic stay.

As noted above, the Debtors are authorized to manage their respective
properties and operate their respective businesses pursuant to the Bankruptcy
Code. During the course of the Chapter 11 Cases, the Debtors will be subject to
the jurisdiction and supervision of the Bankruptcy Court. The United States
Trustee has appointed (i) an official committee of Unsecured Creditors in the
CRIIMI MAE Chapter 11 Case, (ii) an official committee of Unsecured Creditors in
the Management Chapter 11 Case and (iii) an official committee of Equity
Security Holders in the CRIIMI MAE Chapter 11 Case (collectively, the
"Committees"). The Committees are expected to participate in the formulation of
the plans of reorganization for the respective Debtors. The Debtors are required
to pay certain expenses of the Committees, including professional fees, to the
extent allowed by the Bankruptcy Court.

Under the Bankruptcy Code, for 120 days following the Petition Date,
only the debtor-in-possession has the right to propose and file a plan of
reorganization with the Bankruptcy Court. If a debtor-in-possession files a plan
of reorganization during this exclusivity period, no other party may file a plan
of reorganization until 180 days following the Petition Date, during which
period the debtor-in-possession has the exclusive right to solicit acceptances
of the plan. If a debtor-in-possession fails to file a plan during the
exclusivity period or such additional exclusivity period as may be ordered by
the Bankruptcy Court or, after such plan has been filed, fails to obtain
acceptance of such plan from impaired classes of creditors and equity security
holders during the exclusive solicitation period, any party in interest,
including a creditors' committee, an equity security holders' committee, a
creditor or an equity security holder may file a plan of reorganization for such
debtor. Additionally, if the Bankruptcy Court were to appoint a trustee, the
exclusivity period, if not previously terminated, would terminate.

The Debtors' initial exclusivity period to file a plan of
reorganization ended on February 2, 1999. The Bankruptcy Court extended this
period through August 2, 1999 and again through September 10, 1999. The Debtors
sought a third extension of exclusivity through November 10, 1999 and on
September 20, 1999, the Bankruptcy Court entered an order (i) extending the
Debtors' right to file a plan of reorganization through October 16, 1999, (ii)
providing the Unsecured Creditors' Committee and the Equity Security Holders'
Committee the right to jointly file a plan of reorganization through October 16,
1999 and (iii) providing that any party in interest may file a plan of
reorganization after October 16, 1999. The Debtors filed a Joint Plan of
Reorganization on September

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<PAGE>

22, 1999, and pursuant to a hearing held on December 16, 1999, must file their
proposed Joint Disclosure Statement on or prior to December 23, 1999. On
December 20, 1999, the Unsecured Creditors' Committee of CMI filed its Proposed
Plan of Reorganization and Disclosure Statement with the Bankruptcy Court. The
Unsecured Creditors' Committee of CMI has requested a hearing on approval of its
Disclosure Statement. As of December 23, 1999, no hearing date has been set by
the Bankruptcy Court. For a description of the treatment of the classes of
Claims and Interests under the Plan filed by the Unsecured Committee and a
comparison of such treatment to the treatment of the classes of Claims and
Interests in the Debtors' Plan, see "ALTERNATIVES TO CONFIRMATION OF THE PLAN --
Alternative Chapter 11 Plans."

After a disclosure statement has been filed with the Bankruptcy Court
and it has been approved by the Bankruptcy Court, after notice and a hearing, it
will be sent, together with a plan of reorganization, to members of all classes
of impaired creditors and equity security holders for acceptance or rejection.
Following acceptance or rejection of any plan by impaired classes of creditors
and equity security holders, the Bankruptcy Court, after notice and a hearing,
will consider whether to confirm the plan. To confirm a plan, the Bankruptcy
Court is required to find among other things: (i) with respect to each class of
impaired creditors and equity security holders, that each holder of a claim or
interest of such class either (A) will, pursuant to the plan, receive or retain
property of a value as of the effective date of the plan, that is at least as
much as such holder would have received in a liquidation on such date of the
Debtors or (B) has accepted the plan, (ii) with respect to each class of claims
or equity security holders, that such class has accepted the plan or is not
impaired under the plan, and (iii) confirmation of the plan is not likely to be
followed by the liquidation or need for further financial reorganization of the
Debtors or any successor unless such liquidation or reorganization is proposed
in the plan.

If any impaired class of creditors or equity security holders does not
accept a plan, the proponent of the plan may invoke the so-called "cramdown"
provisions of the Bankruptcy Code. Under these provisions, the Bankruptcy Court
may confirm a plan, notwithstanding the non-acceptance of the plan by an
impaired class of creditors or equity security holders, if certain requirements
of the Bankruptcy Code are met. These requirements include: (i) the plan does
not discriminate unfairly and (ii) the plan is fair and equitable, with respect
to each class of claims or interests that is impaired under, and has not
accepted, the plan. As used in the Bankruptcy Code, the phrases "discriminate"
and "fair and equitable" have narrow and specific meanings and their use herein
is qualified in its entirety by reference to the Bankruptcy Code.

BANKRUPTCY RELATED LITIGATION

The following is a summary of material litigation matters between the
Company and certain of its secured creditors since the Petition Date. The
Company has reached agreement with certain of these creditors, as set forth in
greater specificity below. See "GENERAL INFORMATION - The Debtors and Chapter 11
Filing and Other Chapter 11 Events - Deadline to File Proofs of Claims" for
information regarding claims filed in the Debtors' chapter 11 proceeding.

MERRILL LYNCH

As of the Petition Date, the Company owed Merrill Lynch approximately
$274.8 million with respect to advances to the Company under an assignment
agreement pursuant to which the Company pledged Subordinated CMBS. Borrowings
under this assignment agreement are secured by a first priority security
interest in certain CMBS issued by CBO-2, together with all proceeds,
distributions and amounts realized therefrom (the "Distributions") (the CMBS
pledged to Merrill Lynch and the Distributions are hereafter referred to
collectively as the "Merrill Collateral").

On October 16, 1998, Merrill Lynch filed a motion with the Bankruptcy
Court for relief from the automatic stay or, in the alternative, for entry of an
order directing the Company to provide adequate protection for its interest in
the Merrill Collateral. On October 21, 1998, the Company filed a complaint
against Merrill Lynch for turnover of Distributions remitted to Merrill Lynch on
October 2, 1998 by LaSalle National Bank, as well as other relief.

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<PAGE>

On December 4, 1998, the Bankruptcy Court approved a consent order
entered into between the Company and Merrill Lynch. Among other things, pursuant
to the consent order, the pending litigation with Merrill Lynch was dismissed
without prejudice. The consent order also preserved the portfolio of CMBS
pledged as collateral to Merrill Lynch and provided for the Company to receive
distributions of 50 percent of the monthly cash flow from those CMBS net of
interest payable to Merrill Lynch (the "Company's Distribution Share"). The 50
percent of distributions received by Merrill Lynch is to be applied to reduce
principal. Such arrangement will remain in effect until the earlier of a further
order of the Bankruptcy Court affecting the arrangement or the effective date of
a plan of reorganization of the Company.
On September 7, 1999, the Company filed a Motion to Approve Stipulation
and Consent Order Providing for Adequate Protection. On or about September 27,
1999 the Unsecured Committee and the Equity Committee filed a joint objection to
the Motion. On December 3, 1999, the Bankruptcy Court entered the Stipulation
and Consent Order Providing for Adequate Protection (the "Adequate Protection
Order"). Pursuant to the Adequate Protection Order, a segregated interest
bearing debtor-in-possession account will be created (the "Cash Collateral
Account") into which the Company's Distribution Share will be deposited during
the months of January through March 2000. The Adequate Protection Order provides
Merrill Lynch with a first priority lien on the Cash Collateral Account and
further provides to the extent Merrill has an allowed unsecured claim against
the Company, such claim shall be an allowed administrative expense claim
pursuant to Section 507(b) of the Bankruptcy Code. Subject to certain material
adverse changes defined in the Adequate Protection Order, Merrill Lynch agrees
not to seek further adequate protection or relief from the Automatic Stay before
March 31, 2000.

MORGAN STANLEY

As of the Petition Date, the Company owed Morgan Stanley approximately
$182.4 million with respect to advances to the Company under an agreement
pursuant to which the Company pledged CMBS. The borrowings under this agreement
were secured by certain CMBS, including (i) CRIIMI MAE Commercial Mortgage
Trust, Series 1998-C1, Class B and C Certificates (collectively or any portion
thereof, the "CBO-2 BBB Bonds") and (ii) Morgan Stanley Capital I Inc., Series
1998-W2, Class F, G, H, J, K, L and M Certificates (collectively or any portion
thereof, the "Wells Fargo Bonds" and, together with the CBO-2 BBB Bonds, the
"Morgan Collateral").

On October 6, 1998, Morgan Stanley advised the Company that it was
exercising alleged ownership rights over the Morgan Collateral. On October 20,
1998, the Company filed an adversary proceeding against Morgan Stanley alleging,
among other things, that Morgan Stanley violated the automatic stay, and seeking
turnover of the Morgan Collateral.

On January 12, 1999, the Company and Morgan Stanley agreed upon and
filed with the Bankruptcy Court a stipulation and consent order, which was
approved by the Bankruptcy Court and entered on January 26, 1999. The consent
order provided, among other things, for the following: (i) an agreed sale
procedure for the CBO-2 BBB Bonds during a specified sale period; (ii) the
payment of a portion of the sale proceeds of the CBO-2 BBB Bonds to the Company;
(iii) a standstill period relating to the Wells Fargo Bonds through March 31,
1999 unless otherwise extended by the Company and Morgan Stanley, during which
time Morgan Stanley may not sell, pledge, encumber or otherwise transfer the
Wells Fargo Bonds and (iv) the postponement of the litigation with Morgan
Stanley while the parties seek a permanent resolution of their disputes. On
March 5, 1999, the CBO-2 BBB Bonds were sold. Of the $159 million in net sale
proceeds, $141.2 million was used to repay the Company's borrowings under the
agreement with Morgan Stanley, and $17.8 million was remitted to CRIIMI MAE. As
a result of the transaction, CRIIMI MAE's litigation against Morgan Stanley has
been resolved with respect to the CBO-2 BBB Bonds to the satisfaction of both
parties. The Company and Morgan Stanley have agreed to extend the standstill
period with respect to the Wells Fargo Bonds through and including January 17,
2000, and are currently in discussions to sell the Wells Fargo Bonds. There is
no certainty that the parties will ultimately agree to a sale. At the end of
this standstill period, Morgan Stanley has until January 27, 2000 to respond to
the Company's complaint and resume litigation with respect to the Wells Fargo
Bonds, unless the standstill period is further extended by the parties or an
agreement between the parties is reached.

CITICORP AND CITIBANK

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<PAGE>

In addition to the Citibank Program pursuant to which the Company
originated loans, as previously discussed, the Company also has a financing
arrangement with Citicorp pursuant to which the Company pledged CMBS.

On October 13, 1998, Citicorp demanded from Norwest Bank Minnesota,
N.A. ("Norwest") the immediate transfer of certain CMBS (the "Retained Bonds")
issued pursuant to CMO-IV. Norwest served as indenture trustee. The Retained
Bonds are collateral for amounts advanced to the Company by Citicorp under the
financing arrangement. As of the Petition Date, the Company owed Citicorp $79.1
million under the facility.

On October 15, 1998, the Company filed an emergency motion to enforce
the automatic stay against Norwest and Citicorp. Pursuant to an Order dated
October 23, 1998, the Bankruptcy Court prohibited Citicorp from selling the
Retained Bonds without further order of the Bankruptcy Court. On October 23,
1998, Citicorp requested an emergency hearing regarding the October 23 Order,
and on November 2, 1998, the Company filed a complaint against Citicorp seeking,
among other things, a declaratory judgment as to whether the automatic stay
applies to actions taken by Citicorp with respect to the Retained Bonds.

On March 11, 1999, the Company finalized agreements with Citicorp and
Citibank, pursuant to which the parties agreed to adjourn the pending litigation
for a four month period. The agreements with Citicorp and Citibank were approved
by the Bankruptcy Court through stipulations and consent orders entered on April
5, 1999. One of the agreements also provided that Salomon Smith Barney, in
cooperation with CRIIMI MAE, would sell two classes of investment grade CMBS
from CMO-IV constituting a portion of the collateral securing advances under the
Citicorp financing arrangement. In May 1999, Salomon Smith Barney sold $20
million of the CMO-IV securities held by Holdings. This sale reduced the amounts
owed from Holdings to Citicorp by approximately $17 million. On October 8, 1999,
the remaining CMO-IV securities held by Holdings were sold. This sale reduced
the amounts owed from Holdings to Citicorp by approximately $22 million and
Holdings received net proceeds of approximately $315,000. In addition, Citibank,
in cooperation with CRIIMI MAE, agreed to sell commercial mortgages originated
last year under the Citibank Program, provided that the sale resulted in CRIIMI
MAE receiving minimum net proceeds of not less than $3.5 million, after
satisfying certain amounts due to Citibank, from the amount held in the reserve
account. On August 5, 1999, all but three of the commercial loans originated
under the Citibank Agreement in 1998, with an aggregate unpaid principal balance
of approximately $339 million, were sold for gross proceeds of approximately
$308 million. On September 16, 1999, Citibank sold the remaining three loans,
with an aggregate unpaid principal balance of approximately $32.7 million, for
gross proceeds of approximately $27.2 million. In the case of each sale of the
commercial loans, the minimum net proceeds provision was waived by agreement of
the Company, the Unsecured Committee and the Equity Committee. On July 7, 1999
and again on September 10, 1999, the Bankruptcy Court agreed to a request by
CRIIMI MAE, Citibank and the Unsecured Committee to further postpone the trial
which has not yet been rescheduled.

A related interpleader action between Norwest, the Company and
Citicorp, which was initiated on October 20, 1998 by Norwest to determine
whether the Company or Citicorp is the rightful owner of funds that were to have
been paid by Norwest, as indenture trustee, remains pending before the
Bankruptcy Court. During the pendency of this matter, certain payments on the
retained bonds are held in an account controlled by the Bankruptcy Court. No
trial date has been set for this matter.

FIRST UNION

First Union National Bank ("First Union"), a creditor of both the
Company and CMM, is asserting substantial secured and unsecured claims. On or
about March 23, 1999, First Union filed in each of the Company's and CMM's
Chapter 11 Case a motion for relief from the automatic stay pursuant to section
362(d) of the United States Bankruptcy Code. On or about March 26, 1999, First
Union requested that the Court dismiss without prejudice both motions. On April
20, 1999, First Union refiled its motions for relief from the Automatic Stay.
The hearing was originally scheduled for May 14, 1999, but has been adjourned by
consent.

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<PAGE>

On or about July 1, 1999, the Company entered into an agreement with
First Union resolving its motion for relief from the automatic stay and
authorizing use of First Union's cash collateral. The agreement provides for the
following:

(i) First Union has a valid, perfected, first priority security
interest in certain assignment securities and the assignment
securities income constitutes First Union's cash collateral;

(ii) First Union shall receive adequate protection payments of
post-petition interest at the non-default contract rate plus
payments to be applied to principal equal to 50% of the
difference between the assignment income and the Company's
non-default contract interest obligation. First Union has the
option of using a portion of the assignment income earmarked
for principal to purchase a hedging program;

(iii) The Company shall be entitled to use the assignment income not
paid to First Union in the ordinary course of its business
subject to certain limitations; and

(iv) First Union shall not seek relief from the automatic stay in
the Company's Chapter 11 Case to foreclose upon the assignment
securities and/or the assignment income and none of the
Company, the Company's Committees or First Union shall seek
modification of the adequate protection arrangements set forth
in the agreement for a period commencing upon which the
Bankruptcy Court approves the agreement and terminating on
December 31, 1999, subject to certain exceptions.

The agreement was approved and entered by the Bankruptcy Court on
August 5, 1999. The Company's Creditors Committee has agreed to the arrangement
with First Union.

In addition, on or about July 1, 1999, CMM and First Union entered into
an agreement resolving its motion for relief from the automatic stay. On July 1,
1999, CMM filed a motion for approval of the agreement resolving First Union's
motion for relief from the automatic stay. Based upon an objection filed by
CMM's Unsecured Creditors Committee, the parties are discussing a possible
modification to the agreement and continue to negotiate accordingly. On October
22, 1999, to provide the parties with more time to negotiate a modification to
the agreement, CMM, with the consent of First Union and CMM's Unsecured
Creditors Committee, advised the Bankruptcy Court that it would be withdrawing
the motion for approval of the agreement, without prejudice to CMM's right to
refile once an agreement has been reached with First Union and CMM's Unsecured
Creditors Committee.

Arrangements with Other Creditors

In addition to the foregoing, the Company has had discussions with
other secured creditors against whom the Company was not engaged in litigation.
One such creditor is German American Capital Corporation ("GACC"). On February
3, 1999, the Bankruptcy Court approved an Amended Consent Order between the
Company and GACC that provides for the following: (a) acknowledgement that GACC
has a valid perfected security interest in its collateral; (b) authority for
GACC to hedge its loan, subject to a hedge cost cap; and (c) as adequate
protection, sharing of cash collateral on a 50/50 basis, after payment of
interest expense, with the percentage received by GACC to be applied to reduce
principal and pay certain hedge costs, if any. In addition, the Company is
prohibited from using GACC's cash collateral for certain purposes, including
loan originations and Subordinated CMBS acquisitions. The Amended Consent Order
expired April 28, 1999. The Company and GACC agreed to extend the Amended
Consent Order until August 2, 1999, and a stipulation to that effect was signed
by the Company and GACC and approved by the Court on May 11,1999. The Company
and GACC had negotiated a further extension of the stipulation through September
10, 1999, which extension has now expired. On September 9, 1999, GACC contacted
the Company and requested similar provisions afforded to Merrill Lynch in its
most recent stipulation. See "Legal Proceedings - Bankruptcy Related Litigation
- -Merrill Lynch."

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<PAGE>

SHAREHOLDER LITIGATION

The Company is aware that certain plaintiffs filed 20 separate class
action civil lawsuits (the "Complaints") in the United States District Court for
the District of Maryland, Southern Division (the "District Court") against
certain officers and directors of the Company between October 7, 1998 and
November 30, 1998. On March 9, 1999, the District Court ordered the
consolidation of the Complaints into a single action entitled "In Re CRIIMI MAE,
Inc. Securities Litigation." On April 23, 1999, a group of thirteen putative
members of the class of individuals who allegedly suffered damages during the
class period between February 20, 1998 and October 5, 1998 (collectively, the
"Plaintiffs") filed an Amended and Consolidated class action Complaint alleging
violations of federal securities laws (the "Consolidated Amended Complaint").
The Consolidated Amended Complaint names as defendants William B. Dockser, as
Chairman of the Board of Directors of CRIIMI MAE, H. William Willoughby as a
member of the Board of Directors and/or an officer of CRIIMI MAE, and Cynthia O.
Azzara as an officer of CRIIMI MAE (collectively, the "Defendants"). Although
CRIIMI MAE and CMM have not been named as defendants, both companies are subject
to indemnity obligations to the Defendants under the provisions of their
respective constituent documents, the Defendants' employment contracts and
applicable state law. CRIIMI MAE has directors and officers liability insurance
policies that have a combined coverage limit of $20 million.

The Consolidated Amended Complaint alleges generally that the
Defendants violated Section 10(b) of the Securities and Exchange Act of 1934 as
amended (the "Exchange Act") by, among other things, making false statements of
material fact and failing to disclose certain material facts concerning, among
other things, CRIIMI MAE's business strategy and its ability to meet collateral
calls from lenders. The Consolidated Amended Complaint also generally alleges
that the Defendants violated Section 20(a) of the Exchange Act because each
Defendant was allegedly a "controlling person" as that term is defined under
Section 20(a).

The relief sought in the Consolidated Amended Complaint includes all or
substantially all of the following: (i) certification of a class under Rule 23
of the Federal Rules of Civil Procedure; (ii) certification of the Plaintiffs as
class representatives and as lead plaintiffs and their counsel as lead counsel;
(iii) award of monetary damages, including compensatory and rescissionary
damages and interest thereon; (iv) a judgment awarding the Plaintiffs and the
Class their counsel fees, experts' fee and other costs of suit; (v) award to the
Plaintiffs such other relief as the District Court deems just and proper or as
the District Court otherwise requires; and (vi) trial by jury.

On July 9, 1999, the Defendants filed a Motion to Dismiss, with
prejudice, the Consolidated Amended Complaint. The Defendants filed the motion
under Rule 12(b)(6) of the Federal Rules of Civil Procedure on the grounds that
the Plaintiffs have failed to plead sufficient facts with the requisite
particularity to establish a claim for securities fraud under the Reform Act.
Plaintiffs filed their Opposition to Defendants' Motion to Dismiss on September
24, 1999.

On September 13, 1999, the Court denied Plaintiffs' motions for
appointment of lead plaintiffs and for approval of selected counsel. The Court
also ordered Plaintiffs' counsel to provide notice of the putative claims to
institutional investors identified by Defendants. Finally, the Court ordered
that Plaintiffs nominate no more than three persons to serve as lead plaintiffs,
and that any potential lead plaintiff nominate only one attorney or law firm to
serve as lead counsel.

Plaintiffs filed their Opposition to the Defendants' Motion to Dismiss
on September 24, 1999.

On October 19, 1999, the Court approved the form of the renewed Notice
to potential class members that the Plaintiffs submitted to the Court. The Court
also ordered the Defendants to provide a list of certain institutional investors
who had invested in the Company to the Plaintiffs to whom the renewed Notice is
to be sent.

On December 10, 1999, the Defendants filed their Reply Brief to the
Plaintiffs' Opposition to the Motion to Dismiss.

CRIIMI MAE cannot predict with any certainty the ultimate outcome of
this litigation.

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<PAGE>

See "General Information - The Debtors and Chapter 11 Filing and other
Chapter 11 Events - Deadline to File Proofs of Claim for admissions of a related
claim."

EDGE PARTNERS SETTLEMENT

In February 1996, Edge Partners, L.P. ("Edge Partners"), on behalf of
CRIIMI MAE, filed a First Amended Class and Derivative Complaint (the
"Derivative Complaint") in the District Court. The Derivative Complaint named as
defendants each of the individuals who served on the CRIIMI MAE board of
directors at the time of the Merger and CRIIMI MAE as a nominal defendant. The
Company was subject to indemnity obligations to the directors under provisions
of its constituent documents. In addition, the Company had directors and
officers liability insurance policies with a combined coverage limit of $5
million.

Count I of the Derivative Complaint alleged violations of Section 14(a)
of the Exchange Act for issuing a materially false and misleading proxy in
connection with the Merger and alleged derivatively on behalf of CRIIMI MAE a
breach of fiduciary duty owed to CRIIMI MAE and its shareholders. Edge Partners
sought, among other relief, that unspecified damages be accounted to CRIIMI MAE,
that the shareholder vote in connection with the Merger be null and void and
that certain salaries and other remuneration paid to the directors be returned
to the Company.

On June 16, 1998, the District Court approved a settlement agreement
(the "Settlement Agreement"). Under the terms of the Settlement Agreement, the
Company agreed to make certain disclosures relating to alleged conflicts between
two directors and the Company in connection with the Merger transaction and
adopted a non-binding policy relating generally to the approval of certain
interested transactions. Among other things, the non-binding policy adopted by
the Company's board of directors imposes certain conditions on the board's
approval of transactions between the Company and any director, officer or
employee who owns greater than 1% of the outstanding common shares of the
Company. Such conditions generally include: (1) approval by written resolution
of any transaction involving an amount in excess of $5 million in any year
adopted by a majority of the members of the board having no personal stake in
the transaction; and (2) in the case of any such transaction in excess of $15
million in any year, consideration by the board as to the formation of a special
committee of the board, to be comprised of at least two directors having no
personal stake in such transaction.

Other Litigation

The Company is aware that an alleged shareholder, on behalf of himself
and all others similarly situated, who purchased common stock in a registered
common stock offering made by the Company in January 1998, filed a class action
lawsuit against Prudential Securities Incorporated ("Prudential") and the
Company's independent public accountants (the "Recupito Complaint") in the
United States District Court for the District of Maryland. Neither the Company
nor any officer or director of the Company was named as a defendant in this
lawsuit.

The Recupito Complaint alleges generally that the registration
statement dated October 21, 1997, including a prospectus dated January 20, 1998
and supplemented on January 23, 1998, contained materially false and misleading
statements about the Company and its condition.

The Company may be subject to potential exposure to Prudential under
contractual provisions and both defendants under applicable law. Prudential may
assert that it is entitled to indemnification from the Company based upon an
indemnification provision contained in the underwriting agreement entered into
with the Company in connection with the common stock offering. Certain courts
have held and it is the position of the Securities and Exchange Commission that
indemnification for liabilities arising under the Securities Act of 1933 is
against public policy and unenforceable.

The Company cannot predict with any certainty the ultimate outcome of
this litigation.

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<PAGE>

Claims

More than 850 claims with a face amount of approximately $2.5 billion
have been filed in these Chapter 11 cases, including $344 million in unsecured
claims and approximately $2.2 billion in secured claims. Many of these claims
are duplicate claims filed by the same creditor in each of the three cases. This
amount is far in excess of the approximately $1.18 billion in liabilities
identified by the Debtors in their schedules, which were filed with the
Bankruptcy Court on November 20, 1998. The Debtors have undertaken extensive
efforts to cleanse the claims pool. In addition to analyzing the claims, the
Debtors and the Debtors' counsel have opened discussions with various creditors
regarding the withdrawal of certain claims and in some cases, have objected to
claims. The discussions with various creditors have resulted in withdrawal or
commitments to withdrawal of approximately $1.4 billion in claims. See "GENERAL
INFORMATION - The Debtors and Chapter 11 Filing and Other Chapter 11 Events
Deadline to File Proofs of Claim" for further discussion of claims filed.

E. SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

Nine months
Ended Year ended December 31,
September --------------------------------------------------------------------
30, 1999 1998 1997 1996 1995 1994
-------- ---- ---- ---- ---- ----
(Unaudited) (In thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
TAX BASIS ACCOUNTING
Interest Income:
Subordinated CMBS $157,806 $184,947 $ 86,166 $ 43,632 $ 11,846 $ 1,163
Insured Mortgage 25,424 43,063 49,342 54,827 62,020 60,622
Securities
Originated Loans 26,104 20,570 -- -- -- --

------------- ---------- ------------ ------------- ------------- --------------

Total interest income 209,334 248,580 135,508 98,459 73,866 61,785

------------- ---------- ------------ ------------- ------------- --------------

Interest and related 139,548 161,890 79,574 64,503 52,231 39,077
expenses

------------- ---------- ------------ ------------- ------------- --------------

Net interest margin 69,786 86,690 55,934 33,956 21,635 22,708
------------- ---------- ------------ ------------- ------------- --------------

Capital gains 2,679 1,746 7,815 9,618 5,442 11,023
Other income 2,927 12,309 6,256 6,410 4,938 3,160
Other operating expenses (9,323) (14,440) (9,464) (7,451) (6,727) (7,285)
Realized loss on reverse
repurchase obligation -- (4,503) -- -- -- --
Loss on warehouse
obligation (36,328) -- -- -- -- --
Write-off of capitalized
origination costs -- (3,284) -- -- -- --

Reorganization items (11,892) (2,705) -- -- -- --

------------- ---------- ------------ ------------- ------------- --------------
</TABLE>

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<PAGE>

<TABLE>

<S> <C> <C> <C> <C> <C> <C>
(51,937) (10,877) 4,607 8,577 3,653 6,898

------------- ---------- ------------ ------------- ------------- --------------

Tax basis income before $17,849 $ 75,813 $ 60,541 $ 42,533 $ 25,288 $ 29,606
preferred dividends

Dividends accrued or paid (4,183) (6,998) (6,473) (3,526) -- --
on preferred shares
------------- ---------- ------------ ------------- ------------- --------------

Tax basis income available
to common Shareholders $13,666 $ 68,815 $ 54,068 $ 39,007 $ 25,288 $ 29,606

============= ========== ============ ============= ============= ==============

Tax basis income per share:
Income before gains
from CRI Liquidating $ 0.26 $ 1.42 $ 1.24 $ 1.00 $ 0.70 $ 0.76

Capital gains from CRI
Liquidating -- -- 0.21 0.27 0.19 0.41

------------- ---------- ------------ ------------- ------------- --------------

Total tax basis income per
share $ 0.26 $ 1.42 $ 1.45 $ 1.27 $ 0.89 $ 1.17

============= ========== ============ ============= ============= ==============

Tax basis shares 53,553 48,503 37,334 30,774 28,537 25,310

============= ========== ============ ============= ============= ==============

Dividends paid on common $ -- $ 1.17* $ 1.42 $ 1.22 $ 0.92 $ 1.16
shares
============= ========== ============ ============= ============= ==============

</TABLE>

*Excludes junior preferred stock dividend declared on September 14, 1999 for the
1998 tax year.

Nine months Year ended 31,
Ended September December
30, 1999 1998 1997 1996 1995 1994
-------- ---- ---- ---- ---- ----
(unaudited) (In thousands, except per share data)

ACCOUNTING UNDER GENERALLY
ACCEPTED ACCOUNTING PRINCIPLES
<S> <C> <C> <C> <C> <C> <C>
Statement of Income Data:
Interest Income:
Subordinated CMBS $ 115,690 $143,656 $ 79,670 $ 41,713 $ 11,105 $ 976
Insured Mortgage Securities 25,424 43,063 49,425 56,912 66,115 67,043
Originated Loans 26,104 20,588 -- -- -- --
-------- ------- ------- ------- ------- -------
Total interest income 167,218 207,307 129,095 98,625 77,220 68,019
------- ------- ------- ------- ------- -------
Interest and related expenses 111,620 136,268 77,919 63,079 49,853 39,245
------- ------- ------- ------- ------- -------
Net interest margin 55,598 71,039 51,176 35,546 27,367 28,774

</TABLE>

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<PAGE>

<TABLE>

<S> <C> <C> <C> <C> <C> <C>
Gain on sale of CMBS -- 28,800 -- -- -- --
Other income 647 6,897 6,222 7,330 5,504 3,980
Gain on mortgage securities
dispositions 2,086 1,196 17,343 9,601 1,502 12,999
Other operating expenses (8,953) (14,623) (9,610) (7,970) (9,583) (8,040)
Amortization of assets acquired in
the Merger (2,158) (2,878) (2,878) (2,882) (1,435) --
Realized loss on reverse repurchase
obligation -- (4,503) -- -- -- --
Unrealized losses on warehouse
obligations (8,000) (30,378) -- -- -- --
Write-off of capitalized origination
costs -- (3,284)
Reorganization Items (15,553) (9,857) -- -- -- --
------- ------- ------- ------- ------- -------
(31,931) (28,630) 11,077 6,079 (4,012) 8,939
------- ------- ------- ------- ------- -------
Net income before minority
interest 23,667 42,409 62,253 41,625 23,355 37,713
Minority interest in net income
of consolidated subsidiary -- (40) (8,065) (6,386) (4,821) (11,703)
Dividends accrued or paid on
preferred shares (4,183) (6,998) (6,473) (3,526) -- --
------ ------- ------- ------- ------- -------
Net income available to common
shareholders $19,484 $ 35,371 $ 47,715 $ 31,713 $ 18,534 $ 26,010
------- ------- ------- ------- ------- -------
GAAP basis income per
share - basic $ 0.37 $ 0.75 $ 1.29 $ 1.03 $ 0.65 $ 1.07
------- ------- ------- ------- ------- -------
GAAP basis income per
share - diluted $ 0.33 $ 0.74 $ 1.25 $ 1.03 $ 0.65 $ 1.07
-------- -------- ------- ------- ------- -------

Weighted average shares
outstanding 53,374 47,280 36,993 30,665 28,414 24,249
------- ------- ------- ------- ------- -------

</TABLE>

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<PAGE>

As of September As of December 31,
30, 1999 1998 1997 1996 1995
--------------- ------ --------- --------- ---------
Balance Sheet Data: (unaudited) (In thousands)
<S> <C> <C> <C> <C> <C>
Mortgage Assets:
Subordinated CMBS $1,216,003 $1,114,480 $ 564,335 $ 278,401 $ 38,858
Insured Mortgage Securities 410,357 605,114 691,110 807,113 857,589
Investment in Originated Loans 481,500 -- -- -- --
Total assets 2,347,148 1,873,305 1,367,245 1,203,303 955,050
Total debt 2,088,600 1,414,932 982,258 854,436 627,248
Shareholders' equity 258,548 444,981 346,671 285,704 250,042

</TABLE>

The selected consolidated statement of income data presented above for the nine
months ended September 30, 1999 and the selected consolidated balance sheet data
as of September 30, 1999 were derived from and are qualified by reference to
CRIIMI MAE's consolidated financial statements, which have been included
elsewhere in this Disclosure Statement. The selected consolidated statement of
income data presented above for the years ended December 31, 1998, 1997 and
1996, and the selected consolidated balance sheet data as of December 31, 1998
and 1997, were derived from and are qualified by reference to CRIIMI Mae's
consolidated financial statements, which have been included elsewhere in this
Disclosure Statement. The selected consolidated statement of income data for the
years ended December 31, 1995 and 1994, and the selected consolidated balance
sheet data as of December 31, 1996, 1995 and 1994, were derived from audited
financial statements not included as part of this Disclosure Statement. This
data should be read in conjunction with the consolidated financial statements
and the notes thereto.

F. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

INTRODUCTION

The following discussion and analysis contains statements that may be
considered forward looking. These statements contain a number of risks and
uncertainties as discussed herein and in Certain Risk Factors of this Disclosure
Statement that could cause actual results to differ materially.

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1999 VERSUS 1998

INTEREST INCOME - SUBORDINATED CMBS

The decrease in income from Subordinated CMBS was immaterial for the
three months ended September 30, 1999 as compared to the corresponding period in
1998. Interest income from subordinated CMBS increased by approximately $10.4
million or 10% to approximately $115.7 million for the nine months ended
September 30, 1999 from $105.3 million for the corresponding period in 1998.
During the nine months ended September 30, 1998, the Company increased its CMBS
portfolio by acquiring Subordinated CMBS at purchase prices aggregating
approximately $853 million. This overall increase in income from Subordinated
CMBS was partially offset by a reduction in income from Subordinated CMBS due to
the de-recognition of $132 million face amount of CMBS from CPO-1 in connection
with CPO-2 and also the de-recognition of $345 million face amount of CMBS in
connection with CPO-2. See Note 5 to Notes to Consolidated Financial Statements.

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<PAGE>

approximately 10.1%. These returns were determined based on the anticipated
yield over the expected weighted average life of the Subordinated CMBS, which
considers, among other things, anticipated losses.

INTEREST INCOME-INSURED MORTGAGE SECURITIES

Interest income from Insured Mortgage Securities decreased by
approximately $2.6 million or 25% to approximately $8.0 million for the three
months ended September 30, 1999 from $10.7 million for the corresponding period
in 1998. Interest income from Insured Mortgage Securities decreased by
approximately $8.1 million or 24% to approximately $25.4 million for the nine
months ended September 30, 1999 from approximately $33.5 million for the
corresponding period in 1998. This decrease was principally due to the
prepayment of mortgage securities during the first three quarters of 1999, and
due to the sale or prepayment of mortgage securities held by CRIIMI MAE and
certain of its wholly owned subsidiaries during the year ended 1998. The
prepayment aggregated approximately $66.4 million and $104.6 million in the
proceeds for the nine months ended September 30, 1999 and 1998, respectively.

INTEREST INCOME-ORIGINATED LOANS

Interest income from originated loans decreased by approximately
$255,000 or 3% to approximately $8.6 million for the three months ended
September 30, 1999 as compared to $8.9 million for the corresponding period in
1998. Interest income from originated loans increased by approximately $14.5
million to approximately $26.1 million for the nine months ended September 30,
1999 as compared to approximately $11.6 million for the corresponding period in
1998. The interest income from originated loans was derived from originated
loans included in the CMO-IV securitization which closed in June 1998. The
CMO-IV securitization, where loans were simultaneously acquired and securitized,
totaled $496 million face value of conduit loans, a majority of which were
no-lock loans. During the first three quarters of 1999, four properties and the
related mortgage loans prepaid resulting in net proceeds of approximately $10.6
million.

INTEREST EXPENSE

Total interest expense decreased by approximately $1.8 million or 5% to
approximately $37.9 million for the three months ended September 30, 1999 from
approximately $39.7 million for the corresponding period in 1998. The decrease
was primarily due to prepayments in the Insured Mortgage portfolio and an
overall decrease in CMBS interest expense for the quarter due to principal
payments on the secured debt. The decrease was partially offset by an increase
in interest expense on unsecured borrowings due to the timing of the borrowings
during the third quarter of 1998. Total interest expense increased by
approximately $12.5 million or 13% to approximately $111.6 million for the nine
months ended September 30, 1999 compared to approximately $99.1 million for the
corresponding period in 1998. This increase was principally a result of
increased borrowings in connection with the acquisition of Subordinated CMBS
during 1998. Additionally, CRIIMI MAE incurred interest expense in connection
with the issuance of collateralized mortgage obligations in connection with
CMO-IV. These increases were partially offset by the impact of $477 million face
amount of debt de-recognized from the financial statements in conjunction with
CBO-2 in May 1998. Due to the Chapter 11 filing, certain lenders declared
defaults or otherwise took action against the Company with respect to a number
of CRIIMI MAE's financing facilities. See Note 16 to Consolidated Financial
Statements for a discussion of material litigation between the Company and
various creditors and agreements the Company has reached with certain of these
creditors.

NET INTEREST MARGIN

Net interest margin decreased by approximately $1.2 million or 6% to
approximately $17.6 million for the three months ended September 30, 1999 from
approximately $18.7 million for the corresponding period in 1998. The decrease
was primarily due to the increase in interest expense on unsecured borrowings
due to the timing of the borrowings during the third quarter of 1998. For the
nine months ended September 30, 1999, net interest margin increased by
approximately $4.3 million or 8.3% to approximately $55.6 million from
approximately $51.3 million for the corresponding period in 1998. The net
interest margin increase was due primarily to the increase in Subordinated CMBS
and, to a lesser extent, income from originated loans, as previously discussed.

GAIN ON SALE OF CMBS

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<PAGE>

In May 1998, CRIIMI MAE completed CBO-2 pursuant to which it sold $468
million of investment grade securities created through the resecuritization of
approximately $1.8 billion of its Subordinated CMBS. CRIIMI MAE recognized a
gain of approximately $29 million on the sale of $345 million face amount
investment grade securities sold without call provisions, recognizing CRIIMI
MAE's transfer of control on those securities. The sale of $123 million face
amount investment grade securities with significant call provisions was treated
as a financing and resulted in an unrealized gain of approximately $26 million.
These securities and certain other securities in the transaction included call
provisions to enable CRIIMI MAE to 1) repurchase bonds if market conditions
warrant, and 2) call bonds when it is no longer cost effective to service them.
The sold investment grade securities treated as a financing, as well as
approximately $1.3 billion face amount of investment grade and non-investment
grade securities retained by CRIIMI MAE, are now required to be reflected on
CRIIMI MAE's balance sheet at their fair market value. Additionally, due to the
sale treatment under FAS 125, all remaining Subordinated CMBS and insured
mortgage securities are required to be carried at fair market value.

Additionally, as part of CBO-2, in May 1998, CMSLP sold trustee
servicing rights for $4.2 million, resulting in a gain of $4.2 million for tax
purposes, and approximately $400,000 for financial reporting purposes.

EQUITY IN EARNINGS FROM INVESTMENTS

Equity in earnings increased to approximately $260,000 during the third
quarter of 1999 as compared to equity in earnings of $58,000 for the third
quarter of 1998. Equity in earnings decreased by approximately $3.4 million
during the nine months ended September 30, 1999 due to a net loss of
approximately $1.2 million as compared to equity in earnings of $2.2 million for
the corresponding period in 1998. This decrease included an $860,000 expense for
a prepayment penalty shortfall during the first quarter of 1999 and an increase
in general and administrative expenses due to the growth of CMSLP during 1998
and personnel costs related to a retention program as well as impairment on
certain servicing rights due to the increase in Treasury rates as discussed in
Note 5 to Notes to Consolidated Financial Statements. In addition, as stated in
the Company's 1998 Annual Report on Form 110-K, during the fourth quarter of
1998, due to CRIIMI MAE's chapter 11 filing and its relationship with CRIIMI
MAE, CMSLP arranged for ORIX to succeed CMSLP as master servicer on two
commercial mortgage pools. The remaining servicing portfolio was approximately
$29.4 billion as of September 30, 1999 as compared to approximately $32.0
billion as of September 30, 1998.

OTHER INCOME

Other income decreased by approximately $612,000 or 58% to $449,000
during the third quarter of 1999 as compared to approximately $1.1 million for
the corresponding period in 1998. Other income decreased by approximately $2.0
million or 52% to $1.9 million during the nine months ended September 30, 1999
as compared to approximately $3.9 million for the corresponding period in 1998.
This decrease was primarily attributable to a decrease in short-term interest
and other income earned during the first three quarters of 1999 on the amounts
deposited in the loan origination reserve account due to suspending the
origination loan program in 1998. Approximately $498,000 and $1.9 million of
short-term interest income and net-carry income were earned on these deposits
for the three and nine months ended September 30, 1998, respectively.

NET GAINS ON MORTGAGE SECURITIES DISPOSITIONS

During the third quarter of 1999 and 1998, net gains on mortgage
dispositions were approximately $266,000 and $967,000, respectively. For the
nine months ended September 30, 1999 and 1998, net gains on mortgage
dispositions were approximately $1.9 million and $921,000, respectively. For the
nine months ended September 30, 1999, the prepayments of insured mortgage
securities represented approximately 13% of CRIIMI MAE's beginning of the year
portfolio balance. For any period, gains or losses on mortgage dispositions are
based on the number, carrying amounts and proceeds of mortgages disposed of
during the period. The proceeds realized from the disposition of mortgage assets
are based on the net coupon rates of the specific mortgages disposed of in
relation to prevailing long-term interest rates at the date of disposition.

GAINS ON ORIGINATED LOAN MORTGAGE DISPOSITION

During the third quarter of 1999, net gains on originated loan
dispositions were approximately $75,000, which was a result of prepayments in
the originated loan portfolio. During the nine months ended September 30, 1999,
net gains on originated loan dispositions were approximately $235,000.

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<PAGE>

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses decreased by approximately $1.9
million, or 42%, to approximately $2.7 million for the third quarter of 1999 as
compared to approximately $4.6 million for the third quarter of 1998. General
and administrative expenses decreased by approximately $1.7 million or 16% to
approximately $9.0 million for the nine months ended September 30, 1999 as
compared to approximately $10.7 million for the corresponding period in 1998.
This decrease is primarily due to the suspension of certain business activities
and the dismissal of employees following the Chapter 11 filing in the fourth
quarter of 1998.

UNREALIZED LOSS ON REVERSE REPURCHASE OBLIGATIONS

As part of CMO-IV, the Company intended to sell certain of the security
tranches that were not initially sold to the public (the "CMO-IV BBB bonds"). In
anticipation of this sale, the Company entered into a transaction to hedge the
value of those securities in June 1998. As a result, CRIIMI MAE borrowed and
then sold a 10-year treasury note in the amount of $44 million. This transaction
did not qualify for hedge accounting purposes because it involved the purchase
and sale of a cash instrument and therefore was required to be recorded at
market ("marked to market"). Because Treasury rates declined in the third
quarter of 1998, the Company recorded a $4.1 million unrealized loss as of
September 30, 1998. The position was closed and the loss was realized in the
fourth quarter of 1998.

LOSS ON WAREHOUSE OBLIGATION

During the three and nine months ended September 30, 1999, the Company
recorded losses of approximately $1.1 million and $8.0 million, respectively,
primarily due to a decrease in the selling price of the loans in the Company's
warehouse line with Citibank, when the loans were sold in the third quarter of
1999. The Company recorded, in total, an approximately $36.3 million loss for
this transaction for both GAAP and tax purposes. (See "Tax Basis Income"
discussion which follows).

During the three and nine months ended September 30, 1998, unrealized
losses of $17.6 million were recorded, respectively. At September 30, 1998, the
unrealized loss consisted of the obligation under the Citibank program was
estimated to be $15.6 million (based primarily on information provided by
Citibank) in excess of the fair market value of the loans and the Company's loss
exposure under the Prudential Program (approximately $2 million).

REORGANIZATION ITEMS

During the three and nine months ended September 30, 1999, the Company
recorded approximately $4.6 million and $15.6 million, respectively, in
reorganization items due to the Chapter 11 filings of CRIIMI MAE, CMM and
Holdings.

FOR THE THREE MONTHS ENDED FOR THE NINE MONTHS
REORGANIZATION ITEM SEPTEMBER 30, 1999 ENDED SEPTEMBER 30, 1999
------------------- ------------------ ------------------------
<S> <C> <C>
Short-term interest income $ (852,600) $(1,322,000)
Professional fees 2,896,771 13,010,926
Employee Retention Program accrued 426,353 1,171,855
costs
Excise Tax 475,000 475,000
Other 1,660,478 2,217,002
--------- ---------
Total $4,606,002 $15,552,783
========== ===========

</TABLE>

FINANCIAL STATEMENT NET INCOME

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<PAGE>

As a result of the foregoing, net income available to common
shareholders for financial statement purposes was approximately $8.1 million for
the three months ended September 30, 1999 as compared to a net loss of
approximately $8.7 million as of September 30, 1998. On a per basis share basis,
financial statement net income increased to $0.15 per basic share for the third
quarter of 1999 as compared to a net loss of $0.18 per basic share for the third
quarter of 1998. Net income available to common shareholders for financial
statement was approximately $19.5 million for the nine months ended September
30, 1999, as compared to approximately $47.0 million for the nine months ended
September 30, 1998.

TAX BASIS INCOME

CRIIMI MAE recorded a tax basis loss to common shareholders of
approximately $17.8 million or $0.33 per share during the third quarter of 1999
as compared to tax basis income available to common shareholders of
approximately $19.9 million or $0.41 per share for the third quarter of 1998.
CRIIMI MAE earned approximately $13.7 million or $0.26 per share for the nine
months ended September 30, 1999, compared to approximately $57.3 or $1.22 per
share for the nine months ended September 30, 1998.

The primary factor in the decrease during the third quarter 1999 was
due to the approximately $36.3 million tax basis loss realized on the loans sold
in the third quarter from the warehouse line with Citibank. Other factors
contributing to the decline in tax basis income were the deduction of
reorganization costs and net decreases in earnings from equity investments. In
the second quarter of 1998, as part of CBO-2, CMSLP sold servicing rights for
$4.2 million resulting in a gain of $4.2 million for tax purposes which was
included in equity in earnings in 1998. Partially offsetting the decreases was
an increase in net interest margin due to the growth of CRIIMI MAE's portfolio
of Subordinated CMBS and, to a lesser extent, earnings from CMO-IV.

CASH FLOW

NINE MONTHS ENDED SEPTEMBER 30, 1999 VERSUS 1998

Net cash provided by operating activities for the nine months ended
September 30, 1999 as compared to the nine months ended September 30, 1998. The
increase was primarily due to an increase in payables incurred due to the
reorganization of the Company and a decrease in receivables due to stipulations
and agreements with secured lenders that have resulted in the Company receiving
past due CMBS payments.

Net cash provided by investing activities increased for the nine months
ended September 30, 1999 as compared to the nine months ended September 30,
1998. The increase was primarily due to the suspension of the Company's
Subordinated CMBS acquisition and origination programs as a result of the
chapter 11 filing in October 1998.

Net cash used in financing activities increased for the nine months
ended September 30, 1999 as compared to the nine months ended September 30,
1998. The increase was primarily due to the suspension of the Company's
Subordinated CMBS acquisition activities, suspension of equity and debt
offerings, payment of principal paydowns per the stipulation agreements with
secured lenders and, to a lesser extent, the suspension of cash dividends paid
as a result of the chapter 11 filing in October 1998.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1998 VERSUS 1997

INTEREST INCOME - SUBORDINATED CMBS

Income from Subordinated CMBS increased by approximately $64 million, or
80%, to $143.7 million during 1998 as compared to $79.7 million during 1997.
During 1998, the Company increased its CMBS portfolio by acquiring
Subordinated CMBS at purchase prices aggregating approximately $853 million
during 1998 as compared to the $554 million during 1997. This increase was
partially offset by a reduction in income from Subordinated CMBS due to the
de-recognition of $132 million face amount of CMBS from CBO-1 in connection
with CBO-2 and also the de-recognition of $345 million face amount of CMBS in
connection with CBO-2. See Note 5 to Notes to Consolidated Financial
Statements.

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<PAGE>

Generally accepted accounting principles ("GAAP") require that interest
income generated by Subordinated CMBS be recorded based on the effective
interest method using the anticipated yield over the expected life of the
Subordinated CMBS. This currently results in income which is lower for
financial statement purposes than for tax purposes. Based upon the timing and
amount of future credit losses and certain other assumptions estimated by
management, as discussed below, the estimated weighted average anticipated
unleveraged yield for CRIIMI MAE's Subordinated CMBS for financial statement
purposes as of December 31, 1998 and 1997, was approximately 10% and 11%,
respectively. The decrease in anticipated unleveraged yield is primarily due
to five Subordinated CMBS acquisitions in 1998 with anticipated unleveraged
yields between 8.5% and 8.9% which reduced the overall average of the CMBS
portfolio. These returns were determined based on the anticipated yield over
the expected weighted average life of the Subordinated CMBS, which considers,
among other things, anticipated losses and interest expense attributable to
the financing of the rated tranches at current interest rates and current
borrowing amounts.

INTEREST INCOME-INSURED MORTGAGE SECURITIES

Interest income from insured mortgage securities decreased by
approximately $6.3 million or 13% to $43.1 million for 1998 from $49.4 million
for 1997. This decrease was principally due to the prepayment of 22 mortgage
securities held by CRIIMI MAE and its wholly owned subsidiaries for net proceeds
aggregating approximately $104.0 million and the sale of four mortgage
securities and a portion of a fifth mortgage security for net proceeds
aggregating approximately $13.4 million during 1998.

INTEREST INCOME-ORIGINATED LOANS

Interest income from originated loans of approximately $20.6 million
for 1998 was derived from originated loans included in the CMO-IV
securitization. The CMO-IV securitization totaled $496 million face value of
conduit loans, a majority of which were "No Lock".

INTEREST EXPENSE

Interest expense increased by approximately $58.4 million or 75% to
approximately $136.3 million for 1998 from approximately $77.9 million for 1997.
This increase was principally a result of increased borrowings in connection
with the acquisition of Subordinated CMBS during 1998. Additionally, CRIIMI MAE
incurred interest expense in connection with $100 million aggregate principal
amount of senior unsecured notes issued during the fourth quarter of 1997 and
the issuance of collateralized mortgage obligations in connection with CMO-IV.
These increases were partially offset by the impact of $477 million face amount
of debt de-recognized from the financial statements in conjunction with CBO-2 in
May 1998 and the decrease in the Company's weighted average cost of borrowing to
7.37% in 1998 from 7.68% in 1997, primarily due to a decrease in one-month
LIBOR, based on the average, for the year 1997 as compared to the year 1998. Due
to the chapter 11 filing, certain lenders declared defaults or otherwise took
action against the Company with respect to a number of CRIIMI MAE's financing
facilities. See "LEGAL PROCEEDINGS" for a discussion of material litigation
between the Company and various creditors and agreements the Company has reached
with certain of these creditors.

NET INTEREST MARGIN

Net interest margin increased by approximately $19.8 million or 39% for
1998 to approximately $71.0 million from approximately $51.2 million for 1997.
The net interest margin increase was due primarily to the increase in
Subordinated CMBS and, to a lesser extent, income from originated loans, as
previously discussed.

GAIN ON SALE OF CMBS

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<PAGE>

to enable CRIIMI MAE to (1) repurchase bonds if market conditions warrant, and
(2) call bonds when it is no longer cost effective to service them. The sold
investment grade securities treated as a financing, as well as approximately
$1.3 billion face amount of investment grade and non-investment grade securities
retained by CRIIMI MAE, are now required to be reflected on CRIIMI MAE's balance
sheet at their fair market value. Additionally, due to the sale treatment under
FAS 125, all remaining Subordinated CMBS and insured mortgage securities are
required to be carried at fair market value. This reclassification currently
results in a cumulative net decrease to shareholders' equity of approximately
$251.3 million (a $174.0 million decrease from September 30, 1998).

Additionally, as part of CBO-2, CMSLP sold trustee servicing rights for
$4.2 million, resulting in a gain of $4.2 million for tax purposes, and
approximately $400,000 for financial reporting purposes.

EQUITY IN EARNINGS FROM INVESTMENTS

Equity in earnings from investments decreased by approximately $1.0
million or 28% to $2.6 million during 1998 as compared to $3.6 million during
1997. This decrease included impairment losses on purchased mortgage servicing
rights recorded by CMSLP since their fair value was less than their amortized
cost at December 31, 1998. The general market turmoil commencing in late summer
of 1998 resulted in the use of higher yields in determining the servicing
rights' fair value which caused the fair value to be less than the amortized
cost. At September 30, 1998, CMSLP was responsible for certain servicing
functions on a mortgage loan portfolio of approximately $32 billion. However,
due to CRIIMI MAE's chapter 11 filing and its relationship with CRIIMI MAE,
CMSLP arranged for BOMCM (now ORIX) to succeed it as master servicer on two
commercial mortgage pools during the fourth quarter of 1998, which resulted in a
loss of approximately $1.4 million for the recorded value of the rights, of
which substantially all of the loss flowed through to CRIIMI MAE. These
decreases were partially offset by increases in servicing fee streams and float
income earned on escrow balances derived from the remaining servicing portfolio,
which grew to approximately $31.0 billion as of December 31, 1998 as compared to
approximately $16.5 billion as of December 31, 1997.

OTHER INCOME

Other income increased by approximately $1.7 million or 65% to $4.3
million during 1998 as compared to $2.6 million during 1997. This increase was
primarily attributable to an increase in short-term interest and other income
earned during 1998 on the amounts deposited in the loan origination reserve
account, which had an average balance of approximately $38 million for the year
ended December 31, 1998. Approximately $1.9 million of short-term interest
income and net-carry income were earned on these deposits for the year ended
December 31, 1998. Amounts earned on the origination reserve account for the
year ended December 31, 1997 were immaterial.

GAINS ON MORTGAGE DISPOSITIONS

During 1998, net gains on mortgage dispositions were approximately $1.2
million, of which approximately $666,000 was a result of 22 prepayments of
mortgage securities held by CRIIMI MAE's subsidiaries, or approximately 17% of
its portfolio. In addition, CRIIMI MAE sold four unencumbered mortgage
securities and a portion of a fifth mortgage security, which resulted in a
financial statement gain of $531,000. During 1997, CRI Liquidating's disposition
of its remaining 11 mortgage assets and its interest in three limited
partnership participation agreements resulted in net gains of approximately
$17.4 million (before minority interests) for financial statement purposes.
These 1997 net gains were partially offset by nine prepayments of mortgage
assets held by CRIIMI MAE's subsidiaries which resulted in financial statement
losses of $52,000. For any year, gains or losses on mortgage dispositions are
based on the number, carrying amounts and proceeds of mortgages disposed of
during the period. The proceeds realized from the disposition of mortgage assets
are based on the net coupon rates of the specific mortgages disposed of in
relation to prevailing long-term interest rates at the date of disposition.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased by approximately $5.0
million, or 52%, to $14.6 million for 1998 as compared to $9.6 million for 1997.
The increase in general and administrative

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<PAGE>

expenses during these periods was primarily the result of the significant growth
of CRIIMI MAE's commercial mortgage operations during the first nine months of
1998. This increase was partially offset in the fourth quarter due to the
closing of regional offices, the suspension of certain business activities and
the dismissal of employees involved in suspended activities following the
chapter 11 filing.

REALIZED LOSS ON REVERSE REPURCHASE OBLIGATION AND UNREALIZED LOSSES
ON WAREHOUSE OBLIGATIONS

During 1998, the Company recorded realized and unrealized losses
aggregating $4.5 million and $30.4 million, respectively, primarily due to the
impact of financial market volatility on losses on hedge positions and
commitments related to commercial mortgage loans in the Company's securitization
pipeline.

As part of CMO-IV, the Company intended to sell certain of the security
tranches that were not initially sold to the public (the "CMO-IV BBB bonds"). In
anticipation of this sale, the Company entered into a transaction to hedge the
value of those securities. As a result, CRIIMI MAE borrowed and then sold a
10-year Treasury Note in the amount of $44 million. The Company was informed by
Citibank that the position was closed on October 8, 1998. This transaction did
not qualify for hedge accounting purposes because it involved the purchase and
sale of a cash instrument and therefore is required to be recorded at market
("marked to market"). Because Treasury rates declined from the date of the
transaction to the liquidation of the position, the Company recorded a realized
loss of approximately $4.5 million, of which approximately $4.1 million was
recognized as of September 30, 1998 with the remaining $400,000 loss recognized
in the fourth quarter.

The parties who fund the Company's loan originations are required under
the relevant agreements to hedge the related loans and to provide timely written
hedge position reporting. As of December 31, 1998, the Company's obligation
under the Citibank Program was $28.4 million (based primarily on information
provided by Citibank) in excess of the fair value of the loans and the Company's
loss exposure under the Prudential Program was $2 million if the Company does
not exercise its option. As a result, CRIIMI MAE recorded an aggregate $30.4
million unrealized loss on its obligations as of December 31, 1998. The
unrealized loss of $28.4 million relating to the Citibank Program as of December
31, 1998, was based on the estimated fair value of the loans offset by the
unpaid principal balance of the loans at December 31, 1998, hedge losses and
certain estimated fees and other costs. Depending on market conditions,
including interest rate movements, these losses could materially increase or
decrease in subsequent reporting periods. The Company calculated the Prudential
loss based upon the assumption that the Company would not exercise its option
with Prudential.

WRITE-OFF OF CAPITALIZED ORIGINATION COSTS

Since the Company no longer has the intention to securitize the
remaining loans in warehouse that were originated through the Citibank and
Prudential Programs, the net deferred costs of $3.3 million associated with the
warehoused loans were written off in 1998.

REORGANIZATION ITEMS

During the fourth quarter of 1998, the Company recorded $9.9 million in
reorganization items due to the chapter 11 filings of CRIIMI MAE, CMM and
Holdings.

REORGANIZATION ITEM AMOUNT
<S> <C>
Professional fees $ 5,219,000
Write-off of debt discounts and
deferred
costs 2,835,210
Employee Retention Program accrued
costs 612,885
Lease Cancellation Fees 621,902
Excise Tax 300,000
Other 267,950
----------
Total $9,856,947
==========

FINANCIAL STATEMENT NET INCOME

</TABLE>

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<PAGE>

As a result of the foregoing, net income available to common
shareholders for financial statement purposes was approximately $35.4 million
for 1998, a 26% decrease from approximately $47.7 million for 1997. On a per
basic share basis, financial statement net income decreased to $0.75 per basic
share for 1998 from $1.29 per basic share in 1997.

TAX BASIS INCOME

CRIIMI MAE earned approximately $68.8 million in tax basis income
available to common shareholders in 1998 or $1.42 per share, compared to
approximately $54.1 million or $1.45 per share in 1997.

The primary factors resulting in the $14.7 million increase in tax
basis income from 1997 to 1998 was due to the growth of CRIIMI MAE's portfolio
of Subordinated CMBS and, to a lesser extent, earnings from CMO-IV. Also
contributing to the increase in tax basis income was a $4.2 million gain on the
sale of the trustee servicing rights associated with CBO-2. (See Note 5 to Notes
to Consolidated Financial Statements). Partially offsetting the increases in the
foregoing were increases in interest expense, general and administrative
expenses, reorganization items and the write-off of certain net deferred costs
related to the Citibank and Prudential Programs. Although, in absolute dollars,
tax basis income increased from 1997 to 1998, tax basis income per share
decreased due to the increase in the average number of shares outstanding from
37,334,034 in 1997 to 48,502,522 in 1998. Total tax basis income per share for
1997 included $0.21 of non-recurring income from the mortgage dispositions of a
subsidiary, CRI Liquidating, that completed its scheduled liquidation in late
1997. (See also Note 8 to Notes to Consolidated Financial Statements.)

CASH FLOW

YEAR ENDED 1998 VERSUS 1997

Net cash provided by operating activities increased for 1998 as
compared to 1997 primarily due to the increase in the net interest margin
resulting from the Company's acquisitions of Subordinated CMBS and, to a lesser
extent, CMO-IV (as previously discussed in Results of Operations). This increase
in net interest margin was partially offset primarily by an increase in net
receivables associated with the chapter 11 filing.

Net cash used in investing activities increased for 1998 as compared to
1997. The increase was primarily a result of increased purchases of Subordinated
CMBS. Also contributing to the increase in cash used in investing activities was
the purchase of $496 million of commercial loans in connection with CMO-IV.
These increases were partially offset by approximately $335 million of proceeds
received from the sale of collateral bond obligations in connection with CBO-2
and from mortgage securities disposition proceeds.

Net cash provided by financing activities increased for 1998 as
compared to 1997 primarily due to proceeds from debt issuances related to the
sale of the collateralized mortgage obligations in connection with CMO-IV,
collateralized bond obligations in connection with CBO-2, and variable-rate
secured borrowings, net of principal payments, and increased proceeds from
equity offerings. These increases were partially offset by payments made in
connection with collateral calls made by lenders primarily in the latter part of
the third quarter.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1997 VERSUS 1996

INTEREST INCOME - SUBORDINATED CMBS

Income from Subordinated CMBS increased by approximately $38 million,
or 91%, to approximately $79.7 million during 1997 as compared to approximately
$41.7 million during 1996. This increase was a result of the acquisition of
Subordinated CMBS at purchase prices aggregating approximately $554 million
during 1997 as compared to approximately $285 million during 1996.

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<PAGE>

Generally accepted accounting principles require that the income on
Subordinated CMBS be recorded based on the effective interest method using the
anticipated yield over the expected life of these mortgage assets. This
currently results in income which is lower for financial statement purposes than
for tax purposes. Based on the timing and amount of future credit losses and
certain other assumptions estimated by management, as discussed below, the
estimated weighted average anticipated unleveraged yield for CRIIMI MAE's
Subordinated CMBS for financial statement purposes as of December 31, 1997 and
1996, was approximately 11% and 12%, respectively. This return was determined
based on the anticipated yield over the expected weighted average life of the
Subordinated CMBS, which considers, among other things, anticipated losses and
interest expense attributable to the financing of the rated tranches at current
interest rates and current borrowing amounts.

INTEREST INCOME-INSURED MORTGAGE SECURITIES

Mortgage income decreased by approximately $7.5 million or 13% to
approximately $49.4 million for 1997 from approximately $56.9 million for 1996.
This decrease was principally due to the scheduled disposition of the remaining
11 mortgages of CRI Liquidating's mortgage assets in 1997 in accordance with its
business plan. Also contributing to the decrease in mortgage income was the
prepayment of nine mortgages held by CRIIMI MAE and its wholly owned
subsidiaries for net proceeds aggregating approximately $27 million of proceeds
during 1997.

INTEREST EXPENSE

Interest expense increased by approximately $14.8 million or 23% to
approximately $77.9 million for 1997 from approximately $63.1 million for 1996.
This increase was principally a result of additional amounts borrowed in
connection with the acquisition of Subordinated CMBS during 1997 and to a lesser
extent, the marginally higher cost of debt on CBO-1. These increases were
mitigated by temporary paydowns of short-term secured financing facilities
during 1997, pending the purchase of additional CMBS.

NET INTEREST MARGIN

Net interest margin increased by approximately $15.7 million or 44% for
the twelve months ended December 31, 1997 to approximately $51.2 million from
approximately $35.5 for the corresponding period in 1996. The net interest
margin increase was due primarily to the increase in Subordinated CMBS.

EQUITY IN EARNINGS FROM INVESTMENTS

Equity in earnings from investments decreased by approximately $800,000
or 18% to $3.6 million during 1997 as compared to $4.4 million during 1996. The
decrease was primarily due to a one-time receipt in the fourth quarter of 1996
of previously unpaid and unaccrued net servicing fees (approximately $1.4
million) received by CMSLP on a group of multi-family loans. This decrease was
partially offset by higher income from CMSLP, which resulted from additional
servicing fee streams derived from an expanded servicing portfolio, which grew
to approximately $16.5 billion as of December 31, 1997 as compared to
approximately $6.4 billion as of December 31, 1996. The increased servicing fee
revenue was partially offset by increased general and administrative expenses
associated with the growth in the servicing portfolio, as well as amortization
of certain purchased servicing rights.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses increased by approximately $1.6
million or 20% to $9.6 million for 1997 as compared to $8.0 million for 1996.
The increase in general and administrative expenses was primarily the result of
the continued growth of CRIIMI MAE's commercial mortgage operations.

GAINS/LOSSES ON MORTGAGE DISPOSITIONS

During 1997, CRI Liquidating disposed of its remaining 11 mortgage
assets and its interest in three limited partnership participation agreements
resulting in net gains of approximately $17.4 million for financial statement
purposes. These net gains were partially offset by nine prepayments of mortgage
assets

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<PAGE>

held by CRIIMI MAE and its subsidiaries which resulted in financial statement
net losses of $52,000. This compares to the disposition of 11 CRI Liquidating
mortgage assets which resulted in financial statement net gains of approximately
$9.7 million and 10 CRIIMI MAE mortgage prepayments which resulted in net losses
of $91,000 during 1996. Gains or losses on mortgage dispositions are based on
the number, carrying amounts and proceeds of mortgages disposed of during the
period. The proceeds realized from the disposition of mortgage assets were based
on the net coupon rates of the specific mortgages disposed of in relation to
prevailing long-term interest rates at the date of disposition.

FINANCIAL STATEMENT NET INCOME

As a result of the foregoing, net income available to common
shareholders for financial statement purposes was approximately $47.7 million
for 1997, a 50% increase from approximately $31.7 million for 1996. On a per
basic share basis, financial statement net income increased to $1.29 per basic
share for 1997 from $1.03 for 1996.

TAX BASIS INCOME

CRIIMI MAE earned approximately $54.1 million in tax basis income
available to common shareholders during 1997, a 39% increase from approximately
$39.0 million earned in 1996. Tax basis income per share increased to $1.45 in
1997 from $1.27 in 1996. Ordinary income increased to $1.24 in 1997 from $1.00
in 1996. The primary factor for the increase in tax basis income for 1997 as
compared to 1996 was continued growth in CRIIMI MAE's portfolio of Subordinated
CMBS. Partially offsetting these increases in income was a decrease in mortgage
interest income due to the mortgage security dispositions described above, an
increase in interest expense as a result of additional amounts borrowed to
acquire Subordinated CMBS and an increase in general and administrative expenses
as a result of CRIIMI MAE's continued growth. Net capital gains resulting from
the disposition of CRI Liquidating's mortgage assets, on a per share basis,
decreased from $.27 per weighted average share in 1996 to $.21 per weighted
average share in 1997. (See also Note 8 to Notes to Consolidated Financial
Statements.)

CASH FLOW

YEAR ENDED 1997 VERSUS 1996

Net cash provided by operating activities increased for 1997 as
compared to 1996 primarily due to an increase in net income. Partially
offsetting this increase is an increase in gains on mortgage dispositions and an
increase in interest receivable on Subordinated CMBS as a result of 1997
Subordinated CMBS acquisitions.

Net cash used in investing activities increased for 1997 as compared to
1996. The increase was primarily due to an increase in purchases of Subordinated
CMBS, decreased proceeds from mortgage dispositions, increased purchases of
servicing rights and the funding of the loan origination reserve.

Net cash provided by financing activities increased from 1997 as
compared to 1996 primarily due to increased proceeds from debt issuances, net of
principal payments. Additionally, proceeds from equity offerings increased
primarily as a result of various stock offerings in 1997. The net proceeds from
debt issuances and equity offerings were used primarily to fund additional
Subordinated CMBS purchases, and, to a lesser extent, fund the estimated
subordinate class of loans originated through CRIIMI MAE's mortgage loan conduit
program. Partially offsetting the increase was an increase in dividends paid
resulting from increased net income.

LIQUIDITY AND CAPITAL RESOURCES

Prior to the Petition Date, CRIIMI MAE used proceeds from long-term,
fixed-rate match-funded debt refinancings, short-term, variable-rate, secured
borrowings, unsecured and other borrowings, securitizations and issuances of
common and preferred shares and to meet the capital requirements of its business
plan. Since the chapter 11 filing, the Company has suspended its Subordinated
CMBS acquisition, origination and securitization operations, but continues to
service mortgage loans through CMSLP.

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<PAGE>

ratios. The agreements further provided that the lenders could require the
Company to post cash or additional collateral if the value of the existing
collateral fell below this minimum amount.

In order to refinance a portion of its short-term, variable rate
secured borrowings with long-term, fixed rate debt, the Company entered into
resecuritization transactions. In May 1998, CRIIMI MAE completed CBO-2, its
second resecuritization of its Subordinated CMBS portfolio, which under FAS 125,
qualified for both sale and financing accounting. Through CBO-2, CRIIMI MAE
refinanced $468 million of its variable rate debt with fixed-rate, match-funded
debt. The debt is considered match-funded because the maturities and principal
requirements of the debt match those of the related collateral. The transaction
also generated additional borrowing capacity of approximately $160 million,
which was used primarily to fund additional Subordinated CMBS purchases. In June
1998, CRIIMI MAE securitized $496 million of originated and acquired commercial
mortgage loans by selling $397 million face amount of fixed-rate investment
grade securities. The tranches not sold to the public were partially financed
with variable-rate, secured financing agreements.

After the above structured finance transactions, the Company continued
to have a substantial amount of short-term, variable rate, secured financing
facilities which were subject to the previously discussed collateral
requirements based on CMBS security prices. As a result of the turmoil in the
capital markets commencing in late summer of 1998, the spreads between CMBS
yields and the yields on Treasury securities with comparable maturities began to
increase substantially and rapidly. CRIIMI MAE's short-term secured creditors
perceived that the value of the Subordinated CMBS securing their facilities with
the Company had fallen below the minimum loan-to-value ratio and, consequently,
made demand upon the Company to provide cash or additional collateral with
sufficient value to cure the perceived value deficiency. In August and September
of 1998, the Company received and met collateral calls from its secured
creditors. At the same time, CRIIMI MAE was in negotiations with various third
parties in an effort to obtain additional debt and equity financing that would
provide the Company with additional liquidity.

On Friday afternoon, October 2, 1998, the Company was in the closing
negotiations of a refinancing with one of its unsecured creditors that would
have provided the Company with additional borrowings, when it received a
significant collateral call from Merrill Lynch. The basis for this collateral
call, in the Company's view, was unreasonable. After giving consideration to,
among other things, this collateral call and the Company's concern that its
failure to satisfy this collateral call would cause the Company to be in default
under a substantial portion of its financing arrangements, the Company
reluctantly concluded on Sunday, October 4, 1998 that it was in the best
interests of creditors, equity holders and other parties in interest to seek
chapter 11 protection. Accordingly, the Company filed for relief under chapter
11 on Monday, October 5, 1998.

As of September 30, 1999, CRIIMI MAE had secured financing agreements
with GACC, Lehman ALI, Inc., First Union, Merrill Lynch, Morgan Stanley, and
Citicorp. Certain of these lenders have registered the pledged securities in
their own names. As a result, the trustee makes payments on such securities to
the registered holder. During the fourth quarter of 1998 and first half of 1999,
certain registered holders withheld payments related to securities not
registered to CRIIMI MAE. The Company has negotiated and finalized agreements
with five of its lenders. CRIIMI MAE Inc.'s cash position has increased from
approximately $7 million on October 5, 1998 to approximately $84 million as of
November 10, 1999. Based on present information, the Company believes that it
will have sufficient cash flow to fund its current operations while in
bankruptcy during 1999. However, due to the uncertainty of the effects of the
chapter 11 filing on the business of the Company, pending litigation, material
reorganization items to be incurred during the pendency of the bankruptcy and
numerous other factors beyond the Company's control, no assurance can be given
that the Company's cash flow will be sufficient to fund operations while the
Company is in bankruptcy during 1999.

The value of the Company's portfolio is based upon the combined yield
of current treasury rates and the current spread above treasury rates that an
investor would be willing to pay in a purchase transaction. During the nine
months ended September 30, 1999, the required weighted average spread above
treasury rates was substantially unchanged on a total portfolio basis. However,
treasury rates increased significantly, from December 31, 1998 which, when
combined with the required spreads, resulted in an aggregate $68.8 million
decrease in the value of the

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<PAGE>

Company's portfolio of CMBS and FHA's and GNMA's from December 31, 1998 to
September 30, 1999. For the period from September 30, 1999 to November 12, 1999,
treasury rates have increased. If treasury rates increase and/or spreads widen
from September 30, 1999 levels, the value of the Company's portfolio of
securities would decrease.

In addition, on March 5, 1999, Morgan Stanley sold the CBO-2 BBB Bonds
which have a face amount of $205.8 million and a coupon of 7%. The proceeds of
$159 million were used to pay off $141.2 million of the related short-term,
variable-rate debt due Morgan Stanley and the remaining net proceeds of $17.8
million were remitted to CRIIMI MAE. CRIIMI MAE retained the right to call each
CMBS when the outstanding principal balance amortizes to 15% of its original
face balance. The 15% call option prevents CRIIMI MAE from surrendering control
of the assets pursuant to the requirements of FAS 125 and thus the transaction
is accounted for as a secured borrowing and not a sale. This resulted in CRIIMI
MAE recognizing a fixed-rate liability for these bonds in the amount of the
gross proceeds, which was approximately $159 million.

On April 5, 1999, the Company finalized an agreement by which, Salomon
Smith Barney, in cooperation with CRIIMI MAE, agreed to sell two classes of
investment grade CMBS from CMO-IV with a face amount of $45.9 million and an
average coupon rate of 6.96% constituting a portion of the collateral security
advances under financing agreements with Citicorp. CRIIMI MAE would retain the
right to call each CMBS when the principal balance amortizes to 15% of its
original face balance. The 15% call option would prevent CRIIMI MAE from
surrendering control of the assets pursuant to the requirements of FAS 125 and
thus the transaction would be accounted for as a secured borrowing and not a
sale. A minimum sales price was established in order to sell the bonds. Proceeds
from the sale will be used to pay off $39.6 million of secured debt, certain
costs, and the remainder, if any, remitted to CRIIMI MAE. This will result in
CRIIMI MAE recognizing a fixed-rate liability for these bonds, when they are
sold, in the amount of the gross proceeds. During May 1999, the Company sold $20
million face amount of investment grade CMBS from CMO-IV in accordance with the
agreement noted above. Accordingly, the proceeds from the sale of these CMBS
were used to pay off a portion of the secured debt owed under the Citicorp
Financing agreements and the Company recognized fixed rate debt in the amount of
the gross proceeds received. Therefore, the total realized less the variable
rate secured borrowings associated with these investment grade securities were
proportionally reduced (approximately $17 million) on the balance sheet to
reflect the partial sale. The remaining $25.9 million face amount of the
investment grade CMBS from CMO-IV were sold on October 8, 1999, and therefore
that transaction will be reflected in the fourth quarter as described above.

On August 5, 1999, all but three of the commercial loans originated
under the Citibank Program in 1998, were sold for gross proceeds of
approximately $308 million. The loans sold had an aggregate unpaid principal
balance of $339 million. As a result of the valuation received in the sale, the
Company recorded an additional $10.9 million unrealized loss in the second
quarter bringing its unrealized losses through June 30, 1999 to $35.3 million.
The unrealized losses recorded through June 30, 1999 also included an estimate
of losses (approximately $2 million) related to the three loans in the Citibank
warehouse program (unpaid principal balance of $32.7 million) not sold on August
5, 1999. On September 16, 1999, the remaining three loans were sold resulting in
approximately $1.1 million in additional losses due to a decrease in the actual
proceeds received as compared to the estimated proceeds anticipated on June 30,
1999. The loans sold had an aggregate principal balance of approximately $32.7
million. Therefore, the total realized loss incurred in connection with the
Citibank Program was $36.3 million. Prior to the actual sale of these loans the
Company had recorded its unrealized losses based on pricing data received from
Citibank. In the case of each sale of the commercial loans, the minimum net
proceeds provision was waived by the Company, the Unsecured Committee and the
Equity Committee.

The Company's ability to resume the acquisition of Subordinated CMBS,
as well as its loan origination and securitization programs, depends first on
its ability to obtain the requisite recapitalization financing, obtain
confirmation and approval of a plan reorganization and emerge from bankruptcy as
a successfully reorganized company and second, on its ability to access
additional capital once it has successfully emerged from bankruptcy. Factors
which could affect the Company's ability to access additional capital include,
among other things, the cost and availability of such capital, changes in
interest rates and interest rate spreads, changes in the commercial mortgage
industry and the commercial real estate market, general economic conditions,
perceptions in the capital

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<PAGE>

markets of the Company's business, covenants under the Company's debt securities
and credit facilities, results of operations, leverage, financial condition, and
business prospects. The Company can give no assurance as to whether it will be
able to obtain additional capital or the terms of any such capital.

DIVIDENDS

During the pendency of the chapter 11 proceedings, the Company is
prohibited from paying cash dividends without first obtaining Bankruptcy Court
approval. Among the other factors which impact CRIIMI MAE's dividends are (i)
the level of income earned on uninsured mortgage assets, such as Subordinated
CMBS (including, but not limited to, the amount of OID income and losses, if
any, on Subordinated CMBS), and, to the extent applicable, originated loans,
which varies depending on prepayments, defaults, etc., (ii) the level of income
earned on CRIIMI MAE's or its subsidiaries' insured mortgage security collateral
depending on prepayments, defaults, etc., (iii) the fluctuating yields on
short-term, variable rate, debt and the rate at which CRIIMI MAE's LIBOR-based
debt is priced, as well as the rate CRIIMI MAE pays on its other borrowings,
(iv) the rate at which cash flows from mortgage assets, mortgage dispositions,
and, to the extent applicable, loan origination reserves, escrow deposits and
distributions from its subsidiaries can be reinvested, (v) changes in operating
expenses (including those related to the chapter 11 filing), (vi) to the extent
applicable, cash dividends paid on preferred shares, (vii) to the extent
applicable, whether the Company's taxable mortgage pools continue to be exempt
from corporate level taxes, (viii) the timing and amounts of cash flows
attributable to its other lines of business - mortgage servicing, advisory, to
the extent applicable, origination services and, (ix) to the extent applicable,
realized losses on certain transactions. See "GENERAL INFORMATION - Business and
CMBS Portfolio - Effect of Chapter 11 Filing on REIT Status and Other Tax
Matters" regarding the payment of a junior preferred stock dividend with respect
to 1998 taxable income and the anticipated distribution of a substantial portion
of its 1999 taxable income in the form of non-cash taxable dividends.

Due to the chapter 11 filing on October 5, 1998, dividends were not
paid during the first nine months of 1999 on common or preferred shares.
However, since dividends on the Company's Series B, C and D Preferred Shares are
cumulative, the dividends payable at September 30, 1999 were accrued in the
financial statements. For the three and nine months ended September 30, 1998,
dividends paid on Series B were approximately $1.5 million and approximately
$4.3 million or $0.915 and $2.675 per share, respectively, dividends paid on
Series C Preferred Shares were approximately $357,000 and $1.1 million,
respectively, and dividends paid on Series D Preferred Shares were approximately
$109,000, respectively.

REIT STATUS

CRIIMI MAE has elected to qualify as a REIT for tax purposes under
Sections 856-860 of the Internal Revenue Code for the 1998 tax year. To qualify
for tax treatment as a REIT under the Internal Revenue Code, CRIIMI MAE must
satisfy certain criteria, including certain requirements regarding the nature of
its ownership, assets, income and distributions of taxable income. For a
discussion of the effect of the chapter 11 filing on REIT status and related
risks see "BUSINESS - Effect of chapter 11 Filing on REIT Status and Certain Tax
Matters."

INVESTMENT COMPANY ACT

For a discussion of the Investment Company Act and the risk to the
Company if it were required to register as an Investment Company, see "CERTAIN
RISK FACTORS-Investment Company Act Risk."

YEAR 2000 ISSUE

See "CERTAIN RISK FACTORS - Year 2000" for the Company's assessment of
Year 2000 compliance, the impact of the Year 2000 issue, the Company's risk
associated with the Year 2000 issue and estimated costs to the Company.

G. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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<PAGE>

The Company's principal market risk is exposure to changes in interest
rates related to the US Treasury market as well as the LIBOR market. The Company
will experience fluctuations in the market value of its assets related to
changes in the interest rates of US Treasury bonds as well as increases in the
spread between US Treasury bonds and CMBS. The Company will also have an
increase in the amount of interest expense paid on its variable rate obligations
primarily due to increases in One-Month LIBOR.

CRIIMI MAE has entered into interest rate protection agreements to
mitigate the adverse effects of rising interest rates on its variable-rate
borrowings. The caps provide protection to CRIIMI MAE to the extent interest
rates, based on a readily determinable interest rate index (typically One-Month
LIBOR), increase above the stated interest rate cap, in which case, CRIIMI MAE
will receive payments based on the difference between the index and the cap. The
term of the cap as well as the stated interest rate of the cap, which in most
cases is currently above the current rate of the index, will limit to some
degree the amount of protection that the caps offer.

Prior to the Petition Date, CRIIMI MAE financed a substantial portion
of its Subordinated CMBS acquisitions with short-term, variable rate borrowings
secured by the Company's CMBS. The agreements governing these financing
arrangements typically required the Company to maintain collateral at all times
with a market value not less than a specified percentage of the outstanding
indebtedness. The agreements further provided that the lenders could require the
Company to post cash or additional collateral if the value of the existing
collateral fell below this threshold amount. These financing arrangements were
used by CRIIMI MAE to provide financing during the period of time from the
acquisition or creation of the Subordinated CMBS to the date when CRIIMI MAE
would resecuritize the portfolio in order to match-fund a significant portion of
the portfolio with fixed rate debt, thereby eliminating interest rate risk on
this portion of the CMBS. CRIIMI MAE, in limited cases, entered into
transactions to hedge the value of securities it intended to sell by selling
short Treasury or government insured securities the Company did not own. These
transactions are marked to market with unrealized gains or losses reflected in
the Company's income statement.

The value of the Company's portfolio is based upon the combined yield
of current treasury rates and the current spread above treasury rates that an
investor would be willing to accept in a purchase transaction. During the nine
months ended September 30, 1999, the required weighted average spread above
treasury rates was substantially unchanged on a total portfolio basis. However,
treasury rates increased significantly from December 31, 1998 which, when
combined with the required spreads, resulted in an aggregate $68.8 million
decrease in the value of the Company's portfolio of CMBS and FHA's and GNMA's
from December 31, 1998 to September 30, 1999. For the period from September 30,
1999 to November 12, 1999, treasury rates have increased. If treasury rates
increase and/or spreads widen from the September 30, 1999 levels, the value of
the Company's portfolio of securities would decrease.

H. MARKET AND TRADING INFORMATION

MARKET DATA

CRIIMI MAE's common stock is listed on the New York Stock Exchange
(symbol CMM). As of September 30, 1999, there were approximately 2,130 holders
of record of the Company's common stock. The following table sets forth the high
and low closing sales prices and the dividends per share for CRIIMI MAE's common
stock during the periods indicated:

1999
---------------------
Sales Price
Quarter Ended High Low Dividends per Share

- ------------------ ------------ ------------ ----------------------

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<PAGE>

<S> <C> <C> <C>
March 31 $3-7/8 $2-9/16 $---(1)
June 30 2-3/4 1-15/16 ----(1)
September 30 3-3/16 1-15/16 ----(1)
====

</TABLE>

1998
---------------------
Sales Price
Quarter Ended High Low Dividends per Share

- ------------------ ------------ ------------ ----------------------
<S> <C> <C> <C>
March 31 $16-1/16 $14-7/8 $ 0.37
June 30 15-3/4 13-7/8 0.40
September 30 14-15/16 8-5/8 0.40
December 31 7-1/8 1-1/4 - (1)(2)
---------------------

$ 1.17
=====================

</TABLE>

1997
---------------------
Sales Price
Quarter Ended High Low Dividends Per Share

- -------------------------- ------------ ------------ ----------------------
<S> <C> <C> <C>
March 31 $ 18-1/8 $12-3/4 $ 0.35
June 30 16-5/8 13-7/8 0.35
September 30 17-9/16 15-11/16 0.35
December 31 16-1/2 13-7/8 0.37
---------------------
$ 1.42
=====================

</TABLE>

(1) During the pendency of the chapter 11 proceedings, the Company is
prohibited from paying cash dividends without first obtaining
Bankruptcy Court approval.
(2) The Company declared a dividend payable in junior preferred stock on
September 14, 1999 for the 1998 tax year.

I. MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF CRIIMI MAE

The following table sets forth certain information concerning the
executive officers and directors of the Company as of September 30, 1999.

NAME AGE POSITION
<S> <C> <C>
William B. Dockser (1)........................ 62 Chairman of the Board and Director
H. William Willoughby (1)..................... 53 President, Secretary and Director
Cynthia O. Azzara............................. 40 Senior Vice President,

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<PAGE>

Chief Financial Officer
and Treasurer
David B. Iannarone............................ 38 Senior Vice President and General
Counsel
Donald R. Drew (5)........................... 42 Senior Vice President/Originations
Brian L. Hanson............................... 38 Senior Vice President/Servicing
Garrett G. Carlson, Sr. (2)(3)(4)............. 62 Director
G. Richard Dunnells (2)(3)(4)................. 62 Director
Robert J. Merrick (2)(3)(4)................... 54 Director
Robert E. Woods (2)(3)(4)..................... 51 Director

</TABLE>
________________

(1) Member of the Transactional Committee
(2) Member of the Audit Committee
(3) Member of the Compensation and Stock Option Committee
(4) Member of the Special Reorganization Committee
(5) Mr. Drew tendered his resignation in December 1999, to be effective
January 3, 2000.

Mr. William B. Dockser has been Chairman of the Board of CRIIMI MAE
since 1989. Mr. Dockser also serves as Chairman of the Board of CRI, Inc., the
former advisor to CRIIMI MAE, which currently oversees a $3 billion real estate
portfolio. Prior to forming CRI in 1974, he served as President of Kaufman Broad
Asset Management, Inc., an affiliate of Kaufman and Broad, Inc., which managed a
number of publicly held limited partnerships created to invest in low and
moderate income multifamily apartment complexes. For a period of 2 1/2 years
prior to joining Kaufman and Broad, he served in various positions at HUD,
culminating in the post of Deputy FHA Commissioner and Deputy Assistant
Secretary for Housing Production and Mortgage Credit, where he was responsible
for a federally insured housing production program. Before coming to Washington,
Mr. Dockser was a practicing attorney in Boston and also was a special Assistant
Attorney General for the Commonwealth of Massachusetts. He holds a Bachelor of
Laws degree from Yale University Law School and a Bachelor of Arts degree from
Harvard University.

Mr. H. William Willoughby has been President of CRIIMI MAE since 1990.
Mr. Willoughby was a co-founder of CRI and has served as its President since its
inception in 1974. Mr. Willoughby is principally responsible for the structuring
and oversight of investment vehicles and acquisition programs. Prior to joining
CRI in 1974, he was Vice President of Shelter Company of America and a number of
its subsidiaries, dealing principally with real estate development and equity
financing. Before joining Shelter Company, he was a senior tax accountant with
Arthur Andersen & Company. He holds a Juris Doctorate degree, a Master of
Business Administration degree and a Bachelor of Science degree in Business
Administration from the University of South Dakota.

Ms. Cynthia O. Azzara has been Chief Financial Officer since 1994, a
Senior Vice President since 1995 and Treasurer since 1997. Ms. Azzara is
responsible for accounting, financial and treasury matters of CRIIMI MAE as well
as equity and debt placements in the capital markets. From 1989 to 1994, she
served as Vice President/Controller of CRI public funds. From 1985 to 1989, she
held positions at CRI as manager of financial reporting and assistant
controller. Before joining CRI in 1985, Ms. Azzara was controller for a
consulting company and was a staff accountant for a regional CPA firm in
Virginia. Ms. Azzara is a certified public accountant and holds a B.B.A. in
accounting from James Madison University, magna cum laude.

Mr. David B. Iannarone is Senior Vice President and General Counsel of
CRIIMI MAE. Mr. Iannarone joined CRIIMI MAE Inc. during 1996, and is responsible
for all corporate legal affairs. From 1991 to 1996, he served with the Federal
Deposit Insurance Company/Resolution Trust Company as Counsel-Securities and
Finance. From 1989 to 1991, Mr. Iannarone served with Citibank, N.A. as
assistant vice president and counsel, serving the World Corporate Group and the
Corporate Banking Department. He was with Kaye, Scholer, Fierman, Hays & Handler
as an associate in the Corporate and Banking Department from 1986 to 1989. Mr.
Iannarone received an LLM from the Georgetown University Law Center, a JD from
the University of Villanova School of Law, and a BA from Trinity College.

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<PAGE>

Mr. Donald R. Drew has been a Senior Vice President of the Company
since April 1997. He served as Vice President of First Union National Bank of
Virginia from June 1994 to April 1997. In addition, Mr. Drew served as Senior
Vice President and Vice President of First American Metro Company from December
1992 to June 1993 and July 1992 to December 1992, respectively. Mr. Drew has
tendered his resignation to be effective January 3, 2000.

Mr. Brian L. Hanson has been a Senior Vice President of the Company
since March 1998. From March 1996 to March 1998, he served as Group Vice
President of the Company. Prior to joining the Company, from May 1991 to
February 1996, Mr. Hanson was with the Lanham, Maryland based company of JCF
Partners, where he served as Chief Operating Officer and Director of Asset
Operations and Portfolio Director.

Mr. Garrett G. Carlson, Sr. has served as a Director of the Company
since 1989. Mr. Carlson has served as President of Can-American Realty Corp. and
the Canadian Financial Corp. since 1979 and 1974, respectively, and President of
Garrett Real Estate Development since 1982. Since 1996, Mr. Carlson has served
as a director of Satellite Broadcasting Company. From 1985 to 1995, he served as
Chairman of the Board of SCA Realty Holdings Inc; from 1983 to 1995, he served
as Vice Chairman of the Shelter Development Company Ltd. and from 1992 to 1994,
he served as a director of Bank Windsor.

Mr. G. Richard Dunnells has served as a Director of the Company since
1991. Since 1994, Mr. Dunnells has served as the hiring partner in the
Washington D.C. office of the law firm Holland & Knight. He was Chairman of the
Washington, D.C. law firm of Dunnells & Duvall from 1989 to 1993 and was the
firm's Senior Partner from 1973 to 1993. Mr. Dunnells served on the President's
Commission on Housing from 1981 to 1982 and thereafter served in various roles
at the U.S. Department of Housing and Urban Development from 1969 to 1973,
including Special Assistant to the Under-Secretary, Deputy Assistant Secretary
for Housing and Urban Renewal and Deputy Assistant Secretary for Housing
Management.

Mr. Robert J. Merrick has served as a Director of the Company since
1997. Since February 1998, Mr. Merrick has served as the Director of MCG Credit
Company. From 1985 to 1997, he served as Executive Vice President and Chief
Credit Officer of Signet Banking Company. In addition, while at Signet, Mr.
Merrick also served as Chairman of the Credit Policy Committee and was a member
of the Asset and Liability Committee, as well as the Management Committee. Prior
to joining Signet, Mr. Merrick was a Credit Officer of the Virginia Banking
Company from 1980 to 1984. He also served as Senior Vice President of the Bank
of Virginia from 1976 to 1980.

Mr. Robert Woods has served as a Director of the Company since 1998. He
is currently the Managing Director and head of loan syndications for the
Americas at Societe Generale in New York where he has served in that position
since 1997. Prior to that, Mr. Woods had been Managing Director and Head of the
Real Estate Capital Markets and Mortgage-Backed Securities division at Citicorp
since 1991. Mr. Woods also served as Head of Citicorp's syndications, private
placements, money markets and asset-backed businesses from 1985 to 1990.

Mr. Douglas L. Cooper, who had served as a Senior Vice President of the
Company since March 1998, resigned in October 1999.

COMPENSATION OF DIRECTORS

Directors who are also employees of the Company receive no additional
compensation for their services as directors. Each independent Director receives
(i) an aggregate annual fee of $12,000, (ii) 500 common shares annually, (iii)
options to purchase 500 common shares annually and (iv) a fee of $750 (for
telephonic meetings) or $1,500 (for in-person meetings) per day for each meeting
in which such director participates, including committee meetings held on days
when the Board of Directors is not meeting. In addition, the Company reimburses
directors (including those employed by the Company as executive officers) for
travel and other expenses incurred in connection with their duties as directors
of the Company. The independent directors, in addition to the foregoing
compensation have received

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<PAGE>

additional compensation for their service on the Special Reorganization
Committee. Messrs. Carlson, Dunnells and Merrick each received $25,000.00 and
Mr. Woods, as lead director, received $35,000.00. See "The Debtors and Chapter
11 Filing and other Chapter 11 Events" for a further description of the Special
Reorganization Committee.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has an Audit Committee, a Compensation and Stock
Option Committee, a Transactional Committee and a Special Reorganization
Committee. The Company has no nominating or similar committee.

AUDIT COMMITTEE. The Board of Directors has an Audit Committee
currently comprised of Messrs. Carlson, Dunnells, Merrick and Woods, each of
whom is an independent director. The functions performed by the Audit Committee
are to: (1) recommend independent auditors to the Company; (2) review the scope
of the audit, audit fees, the audit report and the management letter with the
Company's independent auditors; (3) review the financial statements of the
Company; (4) review and approve non-audit services provided by the independent
auditors; and (5) consult with the independent auditors and management with
regard to the adequacy of internal controls.

COMPENSATION AND STOCK OPTION COMMITTEE. The Board of Directors has a
Compensation and Stock Option Committee currently comprised of Messrs. Carlson,
Dunnells, Merrick and Woods, each of whom is an independent director. The
Compensation and Stock Option Committee was formed to establish, review and
modify the compensation (including salaries and bonuses) of the Company's
executive officers, to administer the Employee Stock Option Plan and to perform
such other duties as may be delegated to it by the Board of Directors.

TRANSACTIONAL COMMITTEE. The Board of Directors has a Transactional
Committee currently comprised of Messrs. Dockser and Willoughby. The
Transactional Committee was formed to review and approve certain debt and equity
financings, and securitizations and resecuritizations of assets, with certain of
the foregoing subject to specific limitations.

SPECIAL REORGANIZATION COMMITTEE. The Board of Directors has a Special
Reorganization Committee comprised of Messrs. Carlson, Dunnells, Merrick and
Woods established in connection with the Company's chapter 11 proceeding. See
"The Debtors and Chapter 11 Filing and other Chapter 11 Events" for a further
description of the Special Reorganization Committee.

EXECUTIVE COMPENSATION

The following table sets forth certain information concerning
compensation earned during the last three years by the Chairman of the Board of
Directors and each of the other four most highly compensated executive officers
of the Company whose income exceeded $100,000 during the year ended December 31,
1998 (collectively, the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

Annual Compensation(1) Long Term Compensation
---------------------- ----------------------
Restricted Securities
Stock Underlying All Other
YEAR SALARY ($) BONUS ($) . AWARDS OPTIONS (#) COMPENSATION ($)
---- ---------- --------- ------ ----------- ----------------
<S> <C> <C> <C> <C> <C> <C>
William B. Dockser 1998 $285,600 $ 59,000 -0- 225,000 $334,916 (2)
Chairman of the 1997 $230,000 $215,000 -0- 150,000 $467,424 (2)
Board of 1996 $167,500 -0- -0- -0- $494,672 (2)
Directors

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<PAGE>

Annual compensation(1) Long Term Compensation
---------------------- ----------------------

H. William 1998 $285,600 $ 59,000 -0- 225,000 $334,916 (2)
Willoughby 1997 $230,000 $ 215,000 -0- 150,000 $467,424 (2)
President and 1996 $167,500 -0- -0- -0- $494,672 (2)
Secretary
Frederick J. 1998 $233,150 $ 48,000 -0- 25,000 -0-
Burchill 1997 $191,875 $ 200,000 -0- 45,000 -0-
Executive Vice 1996 $179,375 $ 125,000 -0- 20,000 -0-
President (3)
Cynthia O. Azzara 1998 $185,150 $ 45,000 -0- 20,000 -0-
Senior Vice 1997 $147,500 $ 77,500 -0- 25,000 -0-
President, 1996 $135,000 $ 50,000 -0- 10,000 -0-
Chief
Financial
Officer and
Treasurer
Donald R. Drew 1998 $ $ 30,000 -0- 10,000 -0-
Senior Vice 1997 $525,500 -0- -0- -0- -0-
President (6) (4 )
$166,596
(5)

</TABLE>

- --------------------

(1) Certain of the Company's executive officers receive personal benefits in
addition to salary; however, the aggregate amounts of such personal benefits do
not exceed the lesser of $50,000 or 10% of annual salary and bonus reported for
any Named Executive Officer.
(2) These amounts represent deferred compensation which the Company has agreed
to pay for services performed in connection with the Merger. These amounts were
paid solely from principal and interest received by the Company from CRI in
connection with a note receivable acquired by the Company in the Merger.
(3) Mr. Burchill resigned as Executive Vice President of the Company effective
February 8, 1999.
(4) This amount includes commissions paid of $416,125 but does not include
$144,579 owed to Mr. Drew for commissions accrued, but not paid, prior to the
Petition Date, with respect to which Mr. Drew has an unsecured claim.
(5) This amount relates to the period from April 7, 1997 (commencement of
employment) through December 31, 1997 and includes commissions paid of $55,216.
(6) Mr. Drew has tendered his resignation to be effective January 3, 2000.

EMPLOYMENT AGREEMENTS

On June 30, 1995, in connection with the Merger, the Company, through
its wholly-owned operating subsidiary CMM, entered into employment agreements
with each of Messrs. Dockser and Willoughby. In connection with the adoption of
the Employee Retention Plan, such employment agreements were assumed by CMM and
were amended as of October 5, 1998 (together and as amended, the "Employment
Agreements"). The Employment Agreements each expire June 30, 2000 and provide
that Messrs. Dockser and Willoughby salaries will be adjusted at least annually
by the Compensation and Stock Option Committee of the Board of Directors. Each
of Mr. Dockser and Mr. Willoughby currently receive a base salary of $324,500.
The Employment Agreements require each of Messrs. Dockser and Willoughby to
devote a substantial portion of his time to the affairs of the Company and its
affiliated entities, except that each of them may devote time to other existing
business activities; PROVIDED that the time devoted to such other existing
business activities does not interfere with the performance of his duties to the
Company and its

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<PAGE>

affiliated entities. The agreements define the phrase "substantial portion" to
mean all of the time required to perform the services necessary and appropriate
for the conduct of the businesses of the Company and its affiliated entities.

In the event of a change of control, as defined in the Employment
Agreements, Messrs. Dockser and Willoughby reserve the right to voluntarily
terminate their employment with the Company. Messrs. Dockser and Willoughby are
entitled to severance payments in an amount equal to 18 months' base salary upon
termination without cause and upon an involuntary resignation for any of the
reasons set forth in the Employment Agreements, including a change of control.
Messrs. Dockser and Willoughby are not currently entitled to receive any
retention payments under the Employment Retention Plan. The Bankruptcy Court
may, at its discretion, upon request, authorize the payment of certain retention
payments to Messrs. Dockser and Willoughby in connection with services rendered
during the Chapter 11 cases.

The Employment Agreements provide for indemnification of Messrs.
Dockser and Willoughby to the extent provided for in the bylaws of the Company
and/or CMM up to and including amounts totaling a maximum of $250,000 for all
covered persons, constituting the aggregate deductible under applicable Director
and Officer insurance policies, the application of any available portion of
proceeds of applicable Director and Officer insurance policies, up to $20
million in the aggregate for all covered persons, and the payment of all
uninsured indemnification arising under the post-petition actions of the
executives for which they are otherwise entitled to indemnification under the
Bylaws of the Company and/or CMM.

In July 1998, the Company entered into a new employment agreement with
Cynthia O. Azzara that, in connection with the adoption of the Employee
Retention Plan, was assumed by CMM and was amended as of October 5, 1998 (as
amended, the "Azzara Employment Agreement"). The Azzara Employment Agreement has
a three year term and provides for minimum base annual compensation of $225,000.
The Azzara Employment Agreement contains provisions that prohibit Ms. Azzara
from competing with the Company and certain of its affiliates for a period not
to extend beyond October 5, 2000, subject to certain limited exceptions. In
addition, Ms. Azzara is entitled to receive retention payments, under the
Employee Retention Plan, equal to two times her base salary semiannually over a
two year period, subject to certain conditions. The first retention plan payment
to Ms. Azzara was paid on April 5, 1999 and the second was paid on October 15,
1999. The fourth retention plan payment to Ms. Azzara is subject to Bankruptcy
Court approval. The entire unpaid portion of the retention payments owed to Ms.
Azzara will become immediately due and payable upon the effective date of a plan
of reorganization of the Company, only upon receipt of Bankruptcy Court
approval, or upon the termination of Ms. Azzara other than for cause.

Ms. Azzara is entitled to severance payments in an amount equal to 24
months' base salary upon termination without cause. In addition, upon
termination following a change of control, all options to acquire shares of the
Company's common stock held by Ms. Azzara, to the extent not then exercisable,
will become immediately exercisable. The Azzara Employment Agreement provides
for indemnification of Ms. Azzara to the extent provided for in the bylaws of
the Company and/or CMM up to and including amounts totaling a maximum of
$250,000 for all covered persons, constituting the aggregate deductible under
applicable Officer and Director insurance policies, the application of any
available portion of proceeds of applicable Officer and Director insurance
policies, up to $20 million in the aggregate for all covered persons, and the
payment of all uninsured indemnification arising under the post-petition actions
of the executive for which she is otherwise entitled to indemnification under
the bylaws of the Company and/or CMM.

Pursuant to the Employee Retention Plan, options granted by the Company
after October 5, 1998 will, subject to Bankruptcy Court approval, become
exercisable upon a change of control.

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<PAGE>

EMPLOYEE STOCK OPTION PLAN

The purpose of the Employee Stock Option Plan is to enhance the
long-term profitability of the Company and shareholder value by offering
incentives and rewards to those officers and other employees of the Company and
its subsidiaries who are important to the Company's growth and success, and to
encourage such officers and employees to remain in the service of the Company
and its subsidiaries and to acquire and maintain stock ownership in the Company.

The Employee Stock Option Plan currently provides for grants of stock
options to purchase up to 2,000,000 shares of Company common stock. As of
September 30, 1999, options to purchase a total of 1,701,521 common shares are
outstanding under the Employee Stock Option Plan. Options granted under the
Employee Stock Option Plan are either "nonqualified stock options" or "incentive
stock options." The exercise price for options granted under the Employee Stock
Option Plan may not be less than the fair market value of a share of common
stock on the date of grant.

Any executive officer or other employee of the Company or any
subsidiary of the Company is eligible to be granted options, subject to certain
limitations. The Compensation and Stock Option Committee is authorized to select
from among employees the individuals to whom options are to be granted and to
determine the number of common shares that will be subject to the options,
whether such options are to be incentive stock options or nonqualified stock
options, and the terms and conditions of the options consistent with the
Employee Stock Option Plan.

The Employee Stock Option Plan is administered by the Compensation and
Stock Option Committee. Currently, the Compensation and Stock Option Committee
consists of Messrs. Carlson, Dunnells, Merrick and Woods, each of whom is an
independent director. Except as permitted by Rule 16b-3(c)(2) under the Exchange
Act, options may not be granted under the Employee Stock Option Plan to any
member of the Compensation and Stock Option Committee during the term of his or
her membership on the Compensation and Stock Option Committee.

Pursuant to the Employee Retention Plan, options granted by the Company
after October 5, 1998 will, subject to Bankruptcy Court approval, become
exercisable upon a change of control.

The following table sets forth certain information concerning options
granted to the Named Executive Officers during the year ended December 31, 1998:

OPTION GRANTS IN LAST FISCAL YEAR

% of Total Options
Granted to
Common Shares Employees
Underlying in Fiscal Exercise Price Expiration Grant Date
Name Options Granted Year ($/sh) Date Present Value
---- --------------- ---- ------ ---- -------------
<S> <C> <C> <C> <C> <C>
William B. Dockser 225,000 (1) 28.99% $15.7500 16-Mar-2006 $299,363 (2)
H. William Willoughby 225,000 (1) 28.99% $15.7500 16-Mar-2006 $299,363 (2)
Frederick J. Burchill (3) 25,000 (1) 3.22% $15.7500 08-Feb-1999 $ 33,263 (2)
Cynthia O. Azzara 20,000 (1) 2.58% $15.7500 16-Mar-2006 $ 26,610 (2)
Donald R. Drew (4) 10,000 (1) 1.29% $15.7500 16-Mar-2006 $ 13,305 (2)

</TABLE>

- ------------------

(1) These options were granted on March 16, 1998 and will vest in equal annual
installments commencing on the first anniversary of the date of grant.

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<PAGE>

(2) These values are estimated on the date of grant using the Black-Scholes
option pricing model, which produces a per option share value as of March 16,
1998, the grant date, of $1.3305 using the following principal assumptions:
expected stock price volatility of 26.6%, risk free rate of return of 4.95%,
dividend yield of 9.4% and expected life of 8 years. No adjustments have been
made for forfeitures or nontransferability. The actual value, if any, that the
executive officer will realize from these options will depend solely on the
increase in the stock price over the option price when the options are
exercised.
(3) Mr. Burchill resigned as Executive Vice President of the Company effective
February 8, 1999.
(4) Mr. Drew has tendered his resignation to be effective January 3, 2000.

The following table provides information concerning the exercise of
options during the year ended December 31, 1998 for each of the Named
Executive Officers.

AGGREGATED OPTION EXERCISES IN 1998 AND YEAR-END 1998 OPTION VALUES

Number of Common Value of Unexercised
Shares in-the-money Options
Underlying at FY-end ($)
NAME Common Shares Value Realized Unexercised Exercisable /
---- Acquired ($)(1) Options at FY-end (#) --------------------
On Exercise During -------------- Exercisable / Unexercisable(2)
------------------- ------------- --------------------
1998(#) Unexercisable
------ -------------
<S> <C> <C> <C> <C>
William B. Dockser 12,698 $52,125 677,302
975,000 $0 $0

H. William Willoughby 2,000 $10,710 841,905
975,000 $0 $0

Frederick J. Burchill 20,000 $77,100 73,332
(3) 61,668 $0 $0

Cynthia O. Azzara 6,600 $27,505 33,399
40,001 $0 $0

Donald R. Drew (4) -0- -0-
-0- $0 $0
10,000
</TABLE>

- -----------------

(1) The value realized on the exercise of stock options was determined
by taking the difference between the option price and the fair market value
of the common shares on the date of exercise.

(2) Options have been granted at exercise prices from $9.77 to $15.9375.
The closing price of a share of common stock was $3.50 on December 31, 1998.
The exercise price of the option shares exceeded the market value of such
options at fiscal year end and, accordingly, such options were not "in the
money" as of December 31, 1998.

(3) Mr. Burchill resigned as Executive Vice President of the Company
effective February 8, 1999.

(4) Mr. Drew has tendered his resignation to be effective January 3,
2000.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the
beneficial ownership of the Company's common stock as of September 30, 1999 by
(i) each person known by the Company to be the beneficial owner of more than 5%
of its common stock, (ii) each director of the Company, (iii) each Named
Executive Officer, and (iv) all directors and executive officers of the Company
as a group. Unless otherwise indicated, each stockholder has sole voting and
investment power with respect to the shares beneficially owned.
zzz
<TABLE>
<CAPTION>

AMOUNT AND NATURE
OF COMMON SHARES PERCENTAGE OF COMMON
NAME BENEFICIALLY OWNED SHARES OUTSTANDING
- ---- ------------------ ------------------

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<PAGE>

<S> <C> <C>
William B. Dockser 2,908,833 (1)(2) 5.2%
H. William Willoughby 2,756,733 (1)(3) 4.9%
Garrett G. Carlson, Sr. 17,500 (4) *
G. Richard Dunnells 15,720 (7) *
Robert J. Merrick 4,000 (8) *
Robert E. Woods 1,000(9) *
Cynthia O. Azzara 68,770(10) *
Donald R. Drew 4,934 (5) *

Gotham Partners L.P.
Gotham Partners III
Gotham International Advisors LLC 5,183,000 (6) 9.7%
110 East 42nd Street 18th Floor
New York, NY 10017

All Directors and Executive
Officers as a Group (13 persons) 5,834,932 (11) 10.4%

</TABLE>

- ---------------

*Less than 1%.

(1) Includes 2,767 common shares owned by C.R.I, Inc. of which Messrs. Dockser
and Willoughby are the sole shareholders.
(2) Includes 1,102,302 shares exercisable upon exercise of presently
exercisable options or those exercisable within 60 days. Includes 104,844
common shares held by Mr. Dockser's wife, 125,000 common shares held by the
William B. Dockser '59 Charitable Lead Annuity Trust (for which Mr. Dockser
has sole voting power) and 200,000 common shares held by the Dockser Family
Foundation (for which Mr. Dockser has sole voting power).
(3) Includes 1,266,905 shares exercisable upon exercise of presently
exercisable options or those exercisable within 60 days. Includes 43,100
common shares held by Mr. Willoughby's wife, 27,000 common shares held by
Mr. Willoughby's parents, 10,000 common shares held by Mr. Willoughby's son
and 4,095 common shares held by Mr. Willoughby's daughter.
(4) Includes 2,000 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days. Includes 1,000 common shares
held by Mr. Carlson's wife and 14,500 common shares held by a partnership
for which Mr. Carlson is the sole general partner.
(3) Includes 3,334 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days. Includes 1,000 common shares
held by Mr. Drew's wife.
(4) Based on a Schedule 13G filed by Gotham Partners, L.P., Gotham Partners
III, L.P. and Gotham International Advisors L.L.C., such entities
collectively hold 5,183,000 common shares, for which they hold sole voting
and investment power.
(5) Includes 2,000 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days.
(6) Includes 1,000 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days.
(7) Includes 500 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days.
(8) Includes 51,734 shares exercisable upon exercise of presently exercisable
options or those exercisable within 60 days.
(9) Includes 2,484,150 shares exercisable upon exercise of presently
exercisable options or those exercisable within 60 days.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The Company maintains its headquarters office in Rockville, Maryland.
Pursuant to an administrative services agreement with CRI which was entered into
in connection with the Merger (the "CRI Administrative Services Agreement"), CRI
is obligated to provide the Company and its subsidiaries with certain
administrative office, facility and other services, at cost, with respect to
certain aspects of the Company's business. The Company intends to use the
services provided under the CRI Administrative Services Agreement to the extent
such services are not performed by the Company or provided by another service
provider. The CRI Administrative Services Agreement is terminable on 30 days'
notice at any time by the Company. The Company and its subsidiaries paid charges
under the CRI Administrative Services Agreement of $352,471 for the year ended
December 31, 1998.

In June 1997, a subsidiary of the Company acquired a Holiday Inn
Express hotel in Nashville, Tennessee in a foreclosure sale from a commercial
mortgage-backed security trust. In connection with such purchase, the
subsidiary-owner of the hotel entered into a hotel management agreement (the
"Hotel Management Agreement") with Capitol Hotel Group International, Inc.
("CHGI"), a Maryland company partially owned by Messrs. Dockser and Willoughby.

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<PAGE>

The Hotel Management Agreement provides that in exchange for the hotel
management and operating duties set forth in the agreement, CHGI will receive an
annual management fee in an amount equal to four percent of the total annual
revenues of the hotel plus twenty percent of the annual net profit of the hotel.
For the year ended December 31, 1998, the Company paid a total of $ 4,691 to
CHGI pursuant to the Hotel Management Agreement. Prior to entering into the
Hotel Management Agreement, the Company received a written opinion from an
independent hotel consulting and appraisal company that the terms of the Hotel
Management Agreement were reasonable and within industry standards. Criimi Mae
Brick Church, Inc. has entered into a contract to sell the property which is
subject to bankruptcy court approval.

IV. BUSINESS PLAN

The Company's post-bankruptcy business strategy is designed to
capitalize on its core business strengths. The key components of the Company's
business strategy are initially, upon emergence from Chapter 11, the continued
ownership and management of the Company's remaining portfolio of
mortgage-related assets, the continuation and, as appropriate, expansion of its
servicing business, the reduction of outstanding debt consistent with the terms
agreed to with Merrill and GACC as set forth in Exhibit 1 to the Plan, and the
retention of REIT status; and at such time as the Company is able to access
capital externally through the capital markets on terms acceptable to the
Company (with the use of such capital to be subject to and consistent with the
terms agreed to with Merrill and GACC, as set forth in the Plan), the resumption
of Subordinated CMBS acquisitions and commercial mortgage loan originations and
securitizations.

MANAGEMENT OF EXISTING PORTFOLIO AND CONTINUATION OF SERVICING
BUSINESS. Following its reorganization, the Company will continue to own and
manage, through its servicing affiliate CMSLP, a large portfolio of
mortgage-related assets. On a pro forma basis, giving effect to the
reorganization, including the assumed sale of $____ million (face amount) of
CMBS, the Company's September 30, 1999 balance sheet would include $____ billion
(face amount) of CMBS, $____ million (face amount) of insured mortgage
securities, and $____ million (face amount) of commercial mortgage loans that
were originated and securitized by the Company. The Company will continue to
actively monitor the credit risks and manage the performance of its portfolio in
an effort to maximize returns.

Following the reorganization and rating agency approval, the Company
expects to exercise its right, as owner of the controlling bond class, to
re-name CMSLP as special servicer for transactions in its portfolio currently
being specifically serviced by ORIX with CMSLP as their special sub-servicer. In
addition, the Company intends for CMSLP to actively pursue direct, master and
special servicing assignments, as well as expand its fee based services, for a
variety of participants in the mortgage and asset financing arenas.

ACCESS TO CAPITAL. The Company plans to generate capital internally
(subject to and consistent with the terms agreed to with Merrill and GACC) in
order to fund the initial key components of its business plan, as referenced
above. To generate internal capital, the Company intends to issue non-cash
taxable dividends to shareholders as a substantial portion of future dividend
distributions. The non-cash taxable dividends are expected to help satisfy the
Company's taxable distribution requirements to maintain its status as a REIT;
however, there can be no assurance that such non-cash taxable dividends will
satisfy the Company's taxable distribution requirements.

In order to fund the resumption of CMBS acquisitions and loan
originations and securitizations, discussed in more detail below, the business
plan contemplates that the Company will be required to access the capital
markets (with the use of such capital to be subject to and consistent with the
terms agreed to with Merrill and GACC, as set forth in the Plan) through public
or private issuances of equity or debt securities and/or through secured or
unsecured credit facilities. In addition, it is contemplated that the Company
would continue to use long-term, fixed rate debt refinancings, short-term
borrowing agreements (but to a lesser extent than utilized prior to the chapter
11 filing) and other borrowings to fund a portion of any mortgage asset
acquisitions.

RESUMPTION OF SUBORDINATED CMBS ACQUISITIONS. The Company has
historically been a leading purchaser of Subordinated CMBS. The Company believes
that its servicing and underwriting capabilities are competitive advantages that
allow the Company to compete against other investors who may have greater access
to capital (or the ability to obtain capital at a lower cost) for the
acquisition of Subordinated CMBS. The Company's ability to resume the
acquisition of Subordinated CMBS will depend upon, among other matters, the
Company's ability to access capital to fund such acquisitions, which may include
equity capital, revolving credit facilities and short-term credit facilities.
The Company has not at this time arranged for any post reorganization financing
for the acquisition of Subordinated CMBS and there can be no assurance that the
Company will be able to obtain any such acquisition financing or that if
acquisition financing is available it will be on favorable terms.

RESUMPTION OF LOAN ORIGINATIONS AND SECURITIZATIONS. The Company's
ability to resume mortgage loan originations, principally through mortgage loan
conduit programs with major financial institutions for the primary purpose of
pooling such loans for securitization, will depend upon, among other matters,
the Company's ability to enter into suitable agreements with such financial
institutions and to obtain any equity or debt financing required by such
agreements. To the extent the Company is able to resume its origination program,
it intends to securitize originated mortgage loans, retaining the subordinated
bonds for its

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<PAGE>

portfolio, and providing loan management and servicing functions for the
underlying mortgage pool. The Company has not at this time arranged for any
post-reorganization mortgage loan origination financing and there can be no
assurance that the Company will be able to enter into suitable agreements with
major financial institutions or obtain any financing required by such
agreements.

NEW OPPORTUNITIES. The Company intends to explore the possibility of
additional business activities including, but not limited to, expanding the
scope of servicing efforts to include asset-backed and franchise loan servicing;
the further development of fee-based servicing businesses; joint ventures for
the acquisition of Subordinated CMBS or other real estate assets; and expanding
originations to higher yielding financings, including a greater focus on
mezzanine loans and equity investments. The ability to pursue any new
opportunity will depend upon, among other matters, the availability of capital
and other resources.

V. PLAN OF REORGANIZATION

A. OVERVIEW OF THE PLAN

BRIEF EXPLANATION OF CHAPTER 11

Chapter 11 is the principal business reorganization chapter 11 of the
Bankruptcy Code. Under chapter 11 of the Bankruptcy Code, a debtor is authorized
to reorganize its business for the benefit of itself and its creditors and
stockholders. In addition to permitting rehabilitation of the debtor, another
goal of chapter 11 is to promote equality of treatment of creditors and equity
security holders, respectively, who hold substantially similar claims or
interests with respect to the distribution of the value of a debtor's assets. In
furtherance of these two goals, upon the filing of a petition for relief under
chapter 11, Section 362 of the Bankruptcy Code generally provides for an
automatic stay of substantially all acts and proceedings against the debtor and
its property, including all attempts to collect claims or enforce liens that
arose prior to the commencement of the debtor's Chapter 11 Case.

The consummation of a plan of reorganization is the principal objective
of a chapter 11 case. A plan of reorganization sets forth the means for
satisfying claims against and interests in a debtor. Confirmation of a plan of
reorganization by the Bankruptcy Court makes the plan binding upon the debtor,
any issuer of securities under the plan, any person or entity acquiring property
under the plan and any creditor of or equity security holder in the debtor,
whether or not such creditor or equity security holder (i) is impaired under or
has accepted the plan or (ii) receives or retains any property under the plan.
Subject to certain limited exceptions and other than as provided in the plan
itself or the confirmation order, the confirmation order discharges the debtor
from any debt that arose prior to the date of confirmation of the plan and
substitutes therefor the obligations specified under the confirmed plan.

The following is an overview of certain material provisions of the Plan
of the Debtors, which is attached hereto as Exhibit A. The following summaries
of the material provisions of the Plan do not purport to be complete and are
qualified in their entirety by reference to all the provisions of the Plan,
including all exhibits thereto, all documents described therein and the
definitions therein of certain terms used below. Wherever defined terms of the
Plan not otherwise defined in this Disclosure Statement are used, such defined
terms shall have the meanings ascribed to them in the Plan.

SOLICITATION OF ACCEPTANCES OF THE PLAN

Under the Plan, all Claims and Interests have been separated into
classes according to the applicable Debtor, and each Class has been determined
to be either Impaired or Unimpaired by the Plan's terms. Except as discussed
below under "CONFIRMATION AND CONSUMMATION PROCEDURES -- Confirmation," as a
condition to confirmation, Section 1129(a) of the Bankruptcy Code requires that
(i) each impaired class of claims and interests that receives or retains
property under a plan of reorganization vote to accept the plan and (ii) the
plan meets the other requirements of Section 1129(a). Classes of claims and
interests that do not receive or retain any property under a plan on account of
such claims and interests are deemed to have rejected the plan and are not
entitled to vote, and classes of claims and interests that are not impaired
under a plan are deemed to have accepted the plan and are not entitled to vote.
Therefore, acceptances of the Plan are being solicited only from those who hold
Claims and Interests in an Impaired Class. An Impaired Class of Claims will be
deemed to have accepted the Plan if it is accepted by Holders of at least
two-thirds in dollar amount and a majority in number of Claims of such Class
held by Holders who cast timely votes with respect to the Plan. An Impaired
Class of Interests will be deemed to have accepted the Plan if

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<PAGE>

it is accepted by Holders of at least two-thirds in the amount of the allowed
Interests of such Class held by Holders of such Interests that have voted to
accept or reject the Plan. Holders of Claims or Interests who fail to vote or
who abstain from voting on the Plan are not counted for purposes of determining
either acceptance or rejection of the Plan by any Impaired Class of Claims or
Interests.

If at least one Impaired Class of Claims votes to accept a plan of
reorganization (not counting the votes of insiders), the Plan may be confirmed
despite rejection by the other impaired Classes if the "cramdown" provisions of
Section 1129(b) of the Bankruptcy Code are satisfied. The "cramdown" provisions
of Section 1129(b) essentially provide that a plan may be confirmed over the
rejection of an impaired class of claims or interests if the plan "does not
discriminate unfairly" and is "fair and equitable" with respect to such
rejecting impaired class.

GENERAL INFORMATION CONCERNING TREATMENT OF CLAIMS AND INTERESTS

In general, the Plan provides that Holders of Allowed Claims or
Interests in Classes: A8, A12, A14, A15, A17, A19, A20, A22, A23, B3, B4, B7,
C3, C4 and C7 are Unimpaired.

Holders of Allowed Claims or Interests in Classes: A1, A2, A3, A4, A5,
A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2, B5, B6, C1, C2, C5 and C6 are
Impaired.

SUMMARY OF CLASSES AND TREATMENT OF CLAIMS AND INTERESTS

Section 1123 of the Bankruptcy Code provides that a plan of
reorganization shall classify the claims and interests of a debtor's creditors
and equity interest holders. In compliance therewith, the Plan divides Claims
and Interests into Classes and sets forth the treatment for each Class. In
accordance with Section 1123(a)(1), Administrative Claims and Priority Tax
Claims have not been classified. The Debtors also are required, under Section
1122 of the Bankruptcy Code, to classify Claims against and Interests in CMI,
CMM and Holdings into Classes that contain Claims and Interests that are
substantially similar to the other Claims and Interests in such Classes.

The classification of Claims and Interests and the nature of
distributions to Holders of Impaired Claims or Impaired Interests in each Class
are summarized below.

CMI CLASSES

<TABLE>

<S> <C>
Class A1 - Citicorp Secured Claims Class A1 consists of all Allowed Secured Claims against CMI
of Citicorp Securities, Inc., Salomon Smith Barney Inc.,
Citicorp Real Estate, Inc. and/or CitiBank N.A. or any
other Holder of a Secured Claim against CMI under, arising
from or related to that certain Master Repurchase Agreement
between CMI and Citicorp Securities, Inc. dated as of
August 1, 1997 or any documents executed in connection
therewith or related thereto.

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<PAGE>

of and for the benefit of Signet Bank/Virginia entered into as
of June 30, 1995 or that certain Collateral Assignment of
Partnership Interests from CMI in favor of Signet
Bank/Virginia dated as of June 30, 1995 or that certain
Stock Pledge Agreement by CMI in favor of Signet
Bank/Virginia dated as of June 30, 1995 or that certain
Credit Agreement between CMM and Signet Bank/Virginia dated
as of June 30, 1995 or any documents executed in connection
with or related to any of the foregoing.

Class A3 - GACC Secured Claim Class A3 consists of all Allowed Secured Claims against CMI
of German American Capital Corp. or any other Holder of a
Secured Claim against CMI under, arising from or related to
that certain Master Loan and Security Agreement between CMI
and German American Capital Corp. dated as of March 31,
1998 or any documents executed in connection therewith or
related thereto.

Class A7 - Other Secured Claims Class A7 consists of any Allowed Secured Claims against CMI
other than the Secured Claims specified in Classes A1
through A6.

Class A8 - Priority Claims Class A8 consists of all Allowed Priority Claims against
CMI.

Class A9 - Old Senior Note Claims Class A9 consists of all Allowed Claims against CMI of

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<PAGE>

Holders of Old Senior Notes.

Class A10 - CMI General Unsecured Claims Class A10 consists of all Allowed Unsecured Claims against
CMI other than the Unsecured Claims (if any) in Classes A8,
A9, A11, A12, A13, A15, A17, A19, and A23 and other than
Administrative Claims and Priority Tax Claims.

Class A11 - Guarantee Claims Class A11 consists of all Allowed Claims against CMI of
Holders of Guarantee Claims based upon CMI's guarantee of
obligations of CMM or Holdings, as the case may be.

Class A12 - Freddie Mac Claims Class A12 consists of Claims against CMI of Freddie Mac
numbered 335 and 497, on the July 20, 1999 claims register,
in the amount of $230,448,487.24 each.

Class A13 - Intercompany Claims Class A13 consists of all Allowed Claims against CMI of CMM
or Holdings.

Class A14 - Series B Preferred Stock Class A14 consists of all Allowed Series B Preferred Stock
Interests in CMI.

Class A15 - Series B Preferred Stock Securities Claims Class A15 consists of all Allowed Securities Claims on
account of Series B Preferred Stock against CMI.

Class A16 - Old Series C Preferred Stock Class A16 consists of all Allowed Old Series C Preferred
Stock Interests in CMI.

Class A17 - Old Series C Preferred Stock Securities Class A17 consists of all Allowed Securities Claims on
Claims account of Old Series C Preferred Stock against CMI.

Class A18 - Old Series D Preferred Stock Class A18 consists of all Allowed Old Series D Preferred
Stock Interests in CMI.

Class A19 - Old Series D Preferred Stock Securities Claim Class A19 consists of all Allowed Securities Claims on
account of Old Series D Preferred Stock against CMI.

Class A20 - Series F Dividend Preferred Stock Class A20 consists of all Allowed Series F Dividend
Preferred Stock Interests in CMI.

Class A21 - CMI Common Stock Class A21 consists of all Allowed CMI Common Stock
Interests in CMI.

Class A22 - Stock Options Class A22 consists of all Allowed Stock Option Interests in
CMI.

Class A23 - CMI Common Stock Securities Claims Class A23 consists of all Allowed Securities Claims on
account of CMI Common Stock against CMI.

CMM Classes

Class B1 - First Union Secured Claims Class B1 consists of all Allowed Secured Claims against
CMM of First Union National Bank or any other Holder of

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a Secured Claim against CMM under, arising from or
related to that certain Credit Agreement between CMM and
Signet Bank/Virginia dated as of June 30, 1995 or any
documents executed in connection therewith or related
thereto.

Class B2 - Other Secured Claims Class B2 consists of any Allowed Secured Claims against CMM
other than the Secured Claims specified in Class B1.

Class B3 - Priority Claims Class B3 consists of all Allowed Priority Claims against
CMM.

Class B4 - Guarantee Claims Class B4 consists of all Allowed Claims against CMM of
Holders of Guarantee Claims based upon CMM's guarantee of
obligations of CMI or Holdings, as the case may be.

Class B5 - CMM General Unsecured Claims Class B5 consists of all Allowed Unsecured Claims against
CMM other than the Unsecured Claims (if any) in Classes B3,
B4 and B6 and other than Administrative Claims and Priority
Tax Claims.

Class B6 - Intercompany Claims Class B6 consists of all Allowed Claims against CMM of CMI
or Holdings.

Class B7 - CMI's Interests in CMM Class B7 consists of all Allowed Interests in CMM of CMI.

HOLDINGS CLASSES

Class C1 - Citicorp Secured Claims Class C1 consists of all remaining Allowed Secured Claims
(if any) against Holdings of Citicorp Securities, Inc.
and/or Salomon Smith Barney Inc..

Class C2 - Other Secured Claims Class C2 consists of any Allowed Secured Claims against
Holdings other than the Secured Claims specified in Class
C1.

Class C3 - Priority Claims Class C3 consists of all Allowed Priority Claims against
Holdings.

Class C4 - Guarantee Claims Class C4 consists of all Allowed Claims against Holdings of
Holders of Guarantee Claims based upon Holdings' guarantee
of obligations of CMI or CMM, as the case may be.

Class C5 - Holdings General Unsecured Claims Class C5 consists of all Allowed Unsecured Claims against
Holdings other than the Unsecured Claims (if any) in
Classes C3, C4 and C6 and other than Administrative Claims
and Priority Tax Claims.

Class C6 - Intercompany Claims Class C6 consists of all Allowed Claims against Holdings
of CMI or CMM.

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Class C7 - Interests in Holdings Class C7 consists of all Allowed Interests in Holdings of
CMI and CMSLP.

</TABLE>

Except for Disputed Claims, distributions will be made on the Effective
Date or as soon as practicable thereafter. See "THE PLAN OF REORGANIZATION
- --Distributions Under the Plan" for a discussion of Plan provisions that may
affect the timing of distributions under the Plan. Distributions on account of
Claims that become Allowed Claims after the Effective Date will be made pursuant
to Section VI.B of the Plan (relating to timing and calculation of amounts to be
distributed under the Plan) and Section VI.H of the Plan (relating to
distributions on account of Disputed Claims once they are allowed). See "THE
PLAN OF REORGANIZATION -- Distributions Under the Plan --Timing and Methods of
Distribution."

The treatment of Claims and Interests described below is subject to the
Plan provisions described in Section IV of the Plan.

B. TREATMENT OF CLAIMS AND INTERESTS UNDER THE PLAN

DESCRIPTION OF CLAIMS AND INTERESTS

ADMINISTRATIVE CLAIMS. Subject to certain additional requirements for
professionals and certain other entities, each Holder of an Allowed
Administrative Claim will receive on account of its Administrative Claim and in
full satisfaction thereof, Cash equal to the amount of such Allowed
Administrative Claim on, as soon as practicable after, the later of the
Effective Date and the day on which such Claim becomes an Allowed Claim, unless
the Holder and the Debtors or the Reorganized Debtors agree or will have agreed
to other treatment of such Claim, or an order of the Bankruptcy Court provides
for other terms; provided, that if incurred in the ordinary course of business
or otherwise assumed by the Debtors pursuant to the Plan (including
Administrative Claims of governmental units for taxes), an Allowed
Administrative Claim will be assumed on the Effective Date and paid, performed
or settled by the Reorganized Company when due in accordance with the terms and
conditions of the particular agreement(s) governing the obligation in the
absence of the Reorganization Cases. In addition, on or before the Effective
Date, all fees payable pursuant to 28 U.S.C. ss.1930, as determined by the
Bankruptcy Court at the Confirmation Hearing, will be paid in Cash equal to the
amount of such Administrative Claim.

PRIORITY TAX CLAIMS. Unless otherwise agreed to by the Debtors or the
Reorganized Debtors and the Holder of a Priority Tax Claim, each Holder of an
Allowed Priority Tax Claim will receive, at the sole option of the Reorganized
Debtors (i) Cash equal to the unpaid portion of such Allowed Priority Tax Claim
on the later of the Effective Date and the date on which such Claim becomes an
Allowed Priority Tax Claim, or as soon thereafter as is practicable, or (ii)
equal quarterly Cash payments in an aggregate amount equal to such Allowed
Priority Tax Claim, together with interest at a fixed annual rate to be
determined by the Bankruptcy Court or otherwise agreed to by the Reorganized
Debtors and such Holder, over a period through the sixth anniversary of the date
of assessment of such Allowed Priority Tax Claim, or upon such other terms
determined by the Bankruptcy Court to provide the Holder of such Allowed
Priority Tax Claim deferred cash payments having a value, as of the Effective
Date, equal to such Allowed Priority Tax Claim.

The Debtors are not currently in a position to determine the amount of
Administrative Claims, Priority Tax Claims and other Priority Claims for which
they will be liable as of the Effective Date. However, solely for purposes of
preparing the projections set forth in Exhibit B hereto and the liquidation
analysis set forth in Exhibit C hereto and of estimating recoveries for
creditors under the Plan, they have assumed that the aggregate amount of such
Claims will not exceed $__,000,000.

TREATMENT OF CLAIMS AGAINST AND INTERESTS IN CMI

1. Class A1 (Citicorp Secured Claims).

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Reorganized CMI will enter into on the Effective Date a refinancing of
the principal amount (or purchase price) owing to the Holder of the Allowed
Class A1 Claim with respect to the CMO-IV Bonds upon terms to be mutually agreed
upon by CMI and the Holder. Each Holder will also receive on the Effective Date
payment in full in Cash of any remaining balance of its Allowed Class A1 Claim
after the refinancing referred to in the preceding sentence, with interest on
such Allowed Claim calculated at the Plan Rate.

The Debtors expect that there will be $____ Allowed Class A1 Claims
against the Debtors as of the Effective Date.

2. Class A2 (First Union Secured Claim).

The Holder will receive on the Effective Date payment in full in Cash
of any remaining balance of the Allowed Class A2 Claim with interest thereon
calculated at the Plan Rate.

The Debtors expect that there will be $____ Allowed Class A2 Claims
against the Debtors as of the Effective Date.

3. Class A3 (GACC Secured Claim).

The Holder will receive on the Effective Date the treatment of its
Allowed Secured Claim set forth on Exhibit 1 to the Plan, or such other
treatment as may be agreed to by CMI and the Holder.

The Debtors expect that there will be $____ Allowed Class A3 Claims
against the Debtors as of the Effective Date.

4. Class A4 (Lehman Secured Claim).

The Holder will receive on the Effective Date payment in full in Cash
of any remaining balance of the Allowed Class A4 Claim with interest thereon
calculated at the Plan Rate.

The Debtors expect that there will be $____ Allowed Class A4 Claims
against the Debtors as of the Effective Date.

5. Class A5 (Merrill Secured Claim).

The Holder will receive on the Effective Date the treatment of its
Allowed Secured Claim set forth on Exhibit 1 of the Plan, or such other
treatment as may be agreed to by CMI and the Holder.

The Debtors expect that there will be $____ Allowed Class A5 Claims
against the Debtors as of the Effective Date.

6. Class A6 (Morgan Stanley Secured Claim).

The Holder will receive on the Effective Date payment in full in Cash
of any remaining balance of the Allowed Class A6 Claim with interest thereon
calculated at the Plan Rate.

The Debtors expect that there will be $____ Allowed Class A6 Claims
against the Debtors as of the Effective Date.

7. Class A7 (Other Secured Claims).

Each Holder (if any) will receive on the Effective Date either (i)
payment in full in Cash of the Allowed Class A7 Claim with interest thereon
calculated at the Plan Rate; (ii) if CMI so elects, the collateral securing the
Allowed Class A7 Claim (if any) in full satisfaction of such claim; or (iii)
such other treatment as may be agreed to by CMI and the Holder (if any).

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The Debtors expect that there will be $____ Allowed Class A7 Claims
against the Debtors as of the Effective Date.

8. Class A8 (Priority Claims).

Each Holder will receive on the Effective Date payment in full in Cash
of the Allowed Class A8 Claim including Plan Interest thereon.

The Debtors expect that there will be $____ Allowed Class A8 Claims
against the Debtors as of the Effective Date.

9. Class A9 (Old Senior Note Claims).

Each Holder as of the Distribution Record Date will receive on the
Effective Date in exchange for its Old Senior Note payment in full of its
Allowed Class A9 Claim, with any accrued and unpaid pre-petition interest
thereon calculated at the Plan Rate and any accrued and unpaid post-petition
interest thereon calculated at the Plan Interest Rate, in the form of a Class A9
Note in a principal amount equal to such Holder's Allowed Class A9 Claim. All
Old Senior Notes shall be deemed cancelled as of the Effective Date.

The Debtors expect that there will be $____ Allowed Class A9 Claims
against the Debtors as of the Effective Date.

10. Class A10 (General Unsecured Claims).

Each Holder will receive on the Effective Date payment in full of its
Allowed Class A10 Claim, with accrued and unpaid pre-petition interest thereon
(if any) calculated at the non-default contract rate of interest in such
Holder's documents for those Holders of Allowed Class A10 Claims who have an
interest rate applicable to such Holder's Allowed Class A10 Claim and any
accrued and unpaid post-petition interest thereon calculated at the Plan
Interest rate, in the form of (i) such Holder's Pro Rata share of the Class A10
Cash Payment (after payment of the convenience class amount provided for
hereinafter) and (ii) a Class A10 Note in an amount equal to the remaining
balance of such Holders' Allowed Class A10 Claim. In lieu of the foregoing
treatment, there shall be a convenience class option as follows: any Holder of
an Allowed Class A10 Claim (or whose Allowed Claim is treated within this Class)
whose Allowed Claim is for $150,000 or less and elects the convenience class
treatment on its ballot, or whose Allowed Claim is for an amount in excess of
$150,000 and elects in writing on its ballot to reduce its claim to $150,000 and
accept convenience class treatment thereof, shall be entitled to receive payment
in Cash on the Effective date of the allowed amount of such Holder's Allowed
Class A10 Claim in full satisfaction of said Claim, with accrued and unpaid
pre-petition interest thereon (if any) calculated at the non-default contract
rate of interest in such Holder's documents for those Holders of Allowed Class
A10 Claims electing convenience class treatment who have an interest rate
applicable to such Holder's Allowed Claim and any accrued and unpaid
post-petition interest thereon calculated the Plan Interest rate. The total
amount to be paid by CMI with respect to the foregoing convenience class options
shall not exceed the aggregate amount of $10 million and such aggregate amount
shall be paid from and thereby reduce the funds in the Class A10 Cash Payment.
The Cash Payment Amount is expected to be, depending on the amount of the CMBS
Sale Proceeds, approximately $40 million.

The Debtors expect that there will be $____ Allowed Class A10 Claims
against the Debtors as of the Effective Date.

11. Class A11 (Guarantee Claims).

If, and only to the extent that, an Allowed Class A11 Claim is not
fully treated with respect to such Holder's underlying Allowed Claim under the
Plan treatment for Claims against CMM or Holdings, as the case may be, any
remaining Allowed Class A11 Claim (if any) will be included as part of the CMI
General Unsecured Claims and treated for all purposes as part of Class A10.

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The Debtors expect that there will be $____ Allowed Class A11 Claims
against the Debtors as of the Effective Date.

12. Class A12 (Freddie Mac Claims).

The Debtors expect that there will be $____ Allowed Class A12 Claims
against the Debtors as of the Effective Date.

13. Class A13 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class A13 Claims
on account of such claims.

The Debtors expect that there will be $____ Allowed Class A13 Claims
against the Debtors as of the Effective Date.

14. Class A14 (Series B Preferred Stock).

Each Holder as of the Effective Date will retain its Series B Preferred
Stock. Each Holder as of the Distribution Record Date will receive payment in
Cash on the Effective Date of the amount of any accrued and past due dividends
on its shares of Series B Preferred Stock.

The Debtors expect that there will be $____ Allowed Class A14 Claims
against the Debtors as of the Effective Date.

15. Class A15 (Series B Preferred Stock Securities Claims).

Each Holder (if any) will, if, as and when any such Claim is Allowed by
Final Order, receive in full satisfaction of any such Allowed Class A15 Claim
its share of any Insurance Proceeds applicable thereto plus, if such Allowed
Class A15 Claim (if any) is not paid in full from such Insurance Proceeds, CMI
Common Stock in an amount equal in value, as of the date of issuance thereof, to
the balance (if any) of such Allowed Class A15 Claim, provided that any such
Claim not timely filed (and in any event not filed before the Confirmation Date)
shall be released and discharged under the Plan and Confirmation Order.

The Debtors expect that there will be $____ Allowed Class A15 Claims
against the Debtors as of the Effective Date.

16. Class A16 (Old Series C Preferred Stock).

Each Holder as of the Distribution Record Date will receive in exchange
for its Old Series C Preferred Stock an identical number of shares of New Series
C Preferred Stock issued effective as of the Effective Date, plus Cash equal to
the amount of any accrued and past due dividends thereon, or such other
treatment as may be agreed to by CMI, the CMI Equity Committee and the Holder(s)
of the Allowed Class A16 Interests. All shares of Old Series C Preferred Stock
shall be deemed cancelled as of the Effective Date.

The Debtors expect that there will be $____ Allowed Class A16 Claims
against the Debtors as of the Effective Date.

17. Class A17 (Old Series C Preferred Stock Securities Claims).

Each Holder (if any) will, if, as and when any such Claim is allowed by
Final Order, receive in full satisfaction of any such Allowed Class A17 Claim
its share of any Insurance Proceeds applicable thereto plus, if

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such Allowed Class A17 Claim (if any) is not paid in full from such Insurance
Proceeds, CMI Common Stock in an amount equal in value, as of the date of
issuance thereof, to the balance (if any) of such Allowed Class A17 Claim,
provided that any such Claim not timely filed (and in any event not filed before
the Confirmation Date) shall be released and discharged under the Plan and
Confirmation Order.

The Debtors expect that there will be $____ Allowed Class A17 Claims
against the Debtors as of the Effective Date.

18. Class A18 (Old Series D Preferred Stock).

Each Holder as of the Distribution Record Date will receive in exchange
its Old Series D Preferred Stock an identical number of shares of New Series D
Preferred Stock issued effective as of the Effective Date, plus Cash equal to
the amount of any accrued and past due dividends thereon, or such other
treatment as may be agreed to by CMI, the CMI Equity Committee and the Holder(s)
of the Allowed Class A18 Interests. All shares of Old Series D Preferred Stock
shall be deemed cancelled as of the Effective Date.

The Debtors expect that there will be $____ Allowed Class A18 Claims
against the Debtors as of the Effective Date.

19. Class A19 (Old Series D Preferred Stock Securities Claims).

Each Holder will, if, as and when any such Claim is Allowed by Final
Order, receive in full satisfaction of any such Allowed Class A19 Claim its
share of any Insurance Proceeds applicable thereto plus, if such Allowed Class
A19 Claim (if any) is not paid in full from such Insurance Proceeds, CMI Common
Stock in an amount equal in value, as of the date of issuance thereof, to the
balance (if any) of such Allowed Class A19 Claim, provided that any such Claim
not timely filed (and in any event not filed before the Confirmation Date) shall
be released and discharged under the Plan and Confirmation Order.

The Debtors expect that there will be $____ Allowed Class A19 Claims
against the Debtors as of the Effective Date.

20. Class A20 (Series F Dividend Preferred Stock).

Each Holder as of the Effective Date will retain its Series F
Dividend Preferred Stock. There shall be no change in the relative rights and
preferences of the Series F Dividend Preferred Stock.

The Debtors expect that there will be $____ Allowed Class A20 Claims
against the Debtors as of the Effective Date.

21. Class A21 (CMI Common Stock).

Each Holder as of the Effective Date will retain its CMI Common Stock.

The Debtors expect that there will be $____ Allowed Class A21 Claims
against the Debtors as of the Effective Date.

22. Class A22 (Stock Options).

Each Holder of a Stock Option as of the Effective Date will retain its
Stock Option.

The Debtors expect that there will be $____ Allowed Class A22 Claims
against the Debtors as of the Effective Date.

23. Class A23 (CMI Common Stock Securities Claims).

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All Holders will receive in full satisfaction of any such Allowed Class
A23 Claims their share of any Insurance Proceeds applicable thereto plus, if
such Allowed Class A23 Claims (if any) are not paid in full from such Insurance
Proceeds, CMI Common Stock in an amount equal in value, as of the date of
issuance thereof, to the balance (if any) of such Allowed Class A23 Claims.

The Debtors expect that there will be $____ Allowed Class A23 Claims
against the Debtors as of the Effective Date.

TREATMENT OF CLAIMS AGAINST AND INTERESTS IN CMM

1. Class B1 (First Union Secured Claims).

The Holder will receive on the Effective Date payment in full in Cash
of any remaining balance of the Allowed Class B1 Claim with interest thereon
calculated at the Plan Rate.

The Debtors expect that there will be $____ Allowed Class B1 Claims
against the Debtors as of the Effective Date.

2. Class B2 (Other Secured Claims).

Each Holder (if any) will receive on the Effective Date either (i)
payment in full in Cash of the Allowed Class B2 Claim with interest thereon
calculated at the Plan Rate; (ii) if CMI so elects, the collateral securing the
Allowed Class B2 Claim (if any) in full satisfaction of such Claim; or (iii)
such other treatment as may be agreed to by CMI and the Holder(s) (if any) of
Allowed Class B2 Claim(s).

The Debtors expect that there will be $____ Allowed Class B2 Claims
against the Debtors as of the Effective Date.

3. Class B3 (Priority Claims).

Each Holder will receive on the Effective Date payment in full in Cash
of the Allowed Class B3 Claim including Plan Interest thereon.

The Debtors expect that there will be $____ Allowed Class B3 Claims
against the Debtors as of the Effective Date.

4. Class B4 (Guarantee Claims).

Each Holder (if any) shall be paid, if, as and when any such Claim is
allowed by Final Order, in Cash in full by CMM or Reorganized CMM including Plan
Interest thereon if, and only to the extent not fully treated with respect to
such Holder's underlying Allowed Claim under the Plan treatment for Claims
against CMI or Holdings, as the case may be.

The Debtors expect that there will be $____ Allowed Class B4 Claims
against the Debtors as of the Effective Date.

5. Class B5 (CMM General Unsecured Claims).

Each Holder will receive on the Effective Date payment in full in Cash
of Allowed Class B5 Claims, with accrued and unpaid pre-petition interest
thereon (if any) calculated at the non-default contract rate of interest in such
Holder's documents for those Holders of Allowed Class B5 Claims who have an
interest rate applicable to such Holder's Allowed Class B5 Claim and any accrued
and unpaid post-petition interest thereon calculated at the Plan Interest Rate.

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The Debtors expect that there will be $____ Allowed Class B5 Claims
against the Debtors as of the Effective Date.

6. Class B6 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class B6 Claims
on account of such Claims.

The Debtors expect that there will be $____ Allowed Class B6 Claims
against the Debtors as of the Effective Date.

7. Class B7 (CMI's Interests in CMM).

The Holder will retain its Interest under the Plan.

The Debtors expect that there will be $____ Allowed Class B7 Claims
against the Debtors as of the Effective Date.

TREATMENT OF CLAIMS AGAINST AND INTERESTS IN HOLDINGS

1. Class C1 (Citicorp Secured Claims).

Each Holder (if any) will receive on the Effective Date payment in full
in Cash of the Allowed Class C1 Claim with interest thereon calculated at the
Plan Rate.

The Debtors expect that there will be $____ Allowed Class C1 Claims
against the Debtors as of the Effective Date.

2. Class C2 (Other Secured Claims).

Each Holder (if any) will receive on the Effective Date either (i)
payment in full in Cash of the Allowed Class C2 Claim with interest thereon
calculated at the Plan Rate; (ii) if CMI so elects, the collateral securing the
Allowed Class C2 Claim (if any) in full satisfaction of such Claim; or (iii)
such other treatment as may be agreed to by CMI and the Holder(s) (if any) of
Allowed Class C2 Claim(s).

The Debtors expect that there will be $____ Allowed Class C2 Claims
against the Debtors as of the Effective Date.

3. Class C3 (Priority Claims).

Each Holder will receive on the Effective Date payment in full in Cash
of theh Allowed Class C3 Claim including Plan Interest thereon.

The Debtors expect that there will be $____ Allowed Class C3 Claims
against the Debtors as of the Effective Date.

4. Class C4 (Guarantee Claims).

Each Holder (if any) will receive if, as and when any such Claim is
allowed by Final Order payment in Cash in full including Plan Interest thereon
if, and only to the extent not fully treated with respect to such Holder's
underlying Allowed Claim under the Plan treatment for Claims against CMI or CMM,
as the case may be.

The Debtors expect that there will be $____ Allowed Class C4 Claims
against the Debtors as of the Effective Date.

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5. Class C5 (Holdings General Unsecured Claims)

Each Holder (if any) will if, as and when any such Claim is allowed by
Final Order, be included as part of the CMI General Unsecured Claims and
included for all purposes in the treatment provided to Class A10.

The Debtors expect that there will be $____ Allowed Class C5 Claims
against the Debtors as of the Effective Date.

6. Class C6 (Intercompany Claims).

No payment shall be made under the Plan to Holders of Class C6 Claims
on account of such Claims.

The Debtors expect that there will be $____ Allowed Class C6 Claims
against the Debtors as of the Effective Date.

7. Class C7 (Interests in Holdings).

The Holder will retain its Interest under the Plan.

The Debtors expect that there will be $____ Allowed Class C7 Claims
against the Debtors as of the Effective Date.

TREATMENT OF UNCLASSIFIED CLAIMS

The Bankruptcy Code does not require classification of certain priority
claims against a debtor. In this case, these unclassified claims include
Administrative Claims and Priority Tax Claims. All distributions referred to
below that are scheduled for the Effective Date will be made on the Effective
Date or as soon as practicable thereafter.

Administrative Claims. An "Administrative Claim" is a claim for payment
of an administrative expense of a kind specified in Section 503(b) of the
Bankruptcy Code and referred to in Section 507(a)(1) of the Bankruptcy Code,
including, without limitation, the actual and necessary costs and expenses
incurred after the commencement of a Chapter 11 Case of preserving the estate or
operating the business of the company (including wages, salaries and commissions
for services), loans and advances to the company made after the petition date,
compensation for legal and other services and reimbursement of expenses awarded
or allowed under Section 330(a) or 331 of the Bankruptcy Code, certain retiree
benefits, certain reclamation claims, and all fees and charges against the
estate under Section 1930 of title 28, United States Code.

Subject to certain additional requirements for professionals and
certain other entities set forth below, Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, shall pay to each Holder of an Allowed
Administrative Claim, on account of its Administrative Claim and in full
satisfaction thereof, Cash equal to the amount of such Allowed Administrative
Claim on the later of the Effective Date or the day on which such Claim becomes
an Allowed Claim, unless the Holder and Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, shall have agreed to other treatment
of such Claim, or an order of the Bankruptcy Court provides for other terms, in
which case such Allowed Administrative Claim shall be paid in accordance with
such agreement or Bankruptcy Court order, as applicable; provided, that if
incurred in the ordinary course of business or otherwise assumed by the Debtors
pursuant to the Plan (including Administrative Claims of governmental units for
taxes), an Allowed Administrative Claim will be assumed on the Effective Date
and paid, performed or settled by Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, when due in accordance with the terms
and conditions of the particular agreement(s) governing the obligation in the
absence of the Reorganization Cases.

PAYMENT OF STATUTORY FEES

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All fees payable pursuant to 28 U.S.C. ss. 1930(a)(6) (U.S. Trustee
Fees) shall be paid by the Debtors or the Reorganized Debtors, as applicable,
when such fees are due and owing.

PRIORITY TAX CLAIMS

BAR DATE FOR ADMINISTRATIVE CLAIMS.

GENERAL PROVISIONS. Except as provided below for (i) non-tax
liabilities incurred in the ordinary course of business by the Debtors in
Possession and (ii) Post-Petition Tax Claims, requests for payment of
Administrative Claims must be Filed and served on counsel for the Debtors and
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be, no
later than (x) sixty (60) days after the Effective Date, or (y) such later date,
if any, as the Bankruptcy Court shall order upon application made prior to the
end of such 60-day period. Holders of Administrative Claims (including, without
limitation, professionals requesting compensation or reimbursement of expenses
and the Holders of any Claims for federal, state or local taxes) that are
required to File a request for payment of such Claims and that do not File such
requests by the applicable bar date shall be forever barred from asserting such
Claims against the Debtors, Reorganized CMI, Reorganized CMM or Reorganized
Holdings, or any of their respective properties.

PROFESSIONALS. All professionals or other Persons requesting
compensation or reimbursement of expenses pursuant to Sections 327, 328, 330,
331, 503(b), 506(b) or 1103 of the Bankruptcy Code for services rendered on or
before the Effective Date (including, without limitation, any compensation
requested by any professional or any other Person for making a substantial
contribution in the Reorganization Cases) shall File and serve on Reorganized
CMI, Reorganized CMM or Reorganized Holdings, as the case may be, and counsel
for Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may
be, an application for final allowance of compensation and reimbursement of
expenses no later than sixty (60) days after the Effective Date. Objections to
applications of professionals or other Persons for compensation or reimbursement
of expenses must be Filed and served on the Reorganized Debtors, counsel for the
Reorganized Debtors and the requesting professional or other Person not later
than ninety (90) days after the Effective Date.

On or as soon as reasonably practicable after the Effective Date,
Reorganized CMI shall pay the contractual claims of the Indenture Trustee for
its fees and expenses including its reasonable attorneys' fees and expenses. To
the extent, after being furnished with normal supporting documents for such fees
and expenses, Reorganized CMI disputes the reasonableness of any such fees and
expenses, Reorganized CMI shall pay such fees and expenses as are not disputed,
and shall submit to the Indenture Trustee a written list of specific fees and
expenses viewed by Reorganized CMI as not being reasonable. To the extent that
Reorganized CMI and the Indenture Trustee are unable to resolve any dispute, the
dispute shall be resolved by the Bankruptcy Court. The Indenture Trustee shall
not attach or set off any of its fees and expenses against distributions to
Holders of Old Senior Notes and shall not otherwise withhold or delay any such
distributions.

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ORDINARY COURSE LIABILITIES. Except as provided herein, holders of
Administrative Claims based on liabilities incurred in the ordinary course of
the Debtors' businesses (other than Claims of governmental units for taxes or
Claims and/or penalties related to such taxes) shall not be required to File any
request for payment of such Claims. Such Administrative Claims shall be assumed
and paid by Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the
case may be, pursuant to the terms and conditions of the particular transactions
giving rise to such Administrative Claims, without any further action by the
Holders of such Claims. Any dispute with respect to ordinary course liabilities
shall be submitted to the Bankruptcy Court for resolution unless resolved by
agreement of the parties.

TAX CLAIMS. All requests for payment of Post-Petition Tax Claims, for
which no bar date has otherwise been previously established, must be Filed on or
before the later of (i) sixty (60) days following the Effective Date, and (ii)
120 days following the filing of the tax return for such taxes for such tax year
or period with the applicable governmental unit. Any Holder of any Post-Petition
Tax Claim that is required to File a request for payment of such taxes and that
does not File such a Claim by the applicable bar date shall be forever barred
from asserting any such Post-Petition Tax Claim against the Debtors, Reorganized
CMI, Reorganized CMM or Reorganized Holdings, or any of their respective
properties, whether any such Post-Petition Tax Claim is deemed to arise prior
to, on or subsequent to the Effective Date.

CRAMDOWN. The so-called "cramdown" provisions of Section 1129(B) of the
Bankruptcy Code permit confirmation of a chapter 11 plan of reorganization in
certain circumstances even if the plan is not accepted by all impaired classes
of claims and interests. In the event that at least one impaired Class of Claims
votes to accept the Plan (and at least one impaired Class either votes to reject
the plan or is deemed to have rejected the Plan), the Debtors and the CMI Equity
Committee reserve the right to request that the Bankruptcy Court confirm the
Plan under the cramdown provisions of the Bankruptcy Code. In that event, the
Debtors and the CMI Equity Committee have reserved the right to modify the Plan
to the extent, if any, that Confirmation pursuant to Section 1129(b) of the
Bankruptcy Code requires or permits modification of the Plan.

As set forth in the Plan, to the extent that any Impaired Class votes
to reject the Plan or is deemed to have rejected the Plan, the Debtors and the
CMI Equity Committee will request that the Bankruptcy Court confirm the Plan
under the "cramdown" provisions of Section 1129(b) of the Bankruptcy Code.

SOURCES OF CASH TO MAKE PLAN DISTRIBUTIONS

Except as otherwise provided in the Plan or the Confirmation Order, all
cash necessary for the Reorganized Debtors to make the payments pursuant to the
Plan will be obtained from the Recapitalization Financing, Reorganized Debtors'
cash balances or the operations of the Debtors or the Reorganized Debtors.

C. CONFIRMATION AND EFFECTIVE DATE CONDITIONS

CONDITIONS TO CONFIRMATION

Confirmation of the Plan is conditioned upon satisfaction of the
applicable provisions of Section 1129 of the Bankruptcy Code and entry of a
Confirmation Order by the Bankruptcy Court in form and substance satisfactory to
the Debtors. Among other things, the Confirmation Order shall authorize and
direct that the Debtors, Reorganized CMI, Reorganized CMM and Reorganized
Holdings take all actions necessary or appropriate to enter into, implement and
consummate the contracts, instruments, releases, leases, indentures and other
agreements or documents created in connection with or contemplated by the Plan,
including, but not limited to, those actions contemplated by the provisions of
the Plan, and shall provide that all New Securities to be issued to Holders of
Claims and Interests pursuant to the Plan, and all securities issuable upon the
conversion of the New Securities are exempt from registration under federal and
state securities laws pursuant to Section 1145 of the Bankruptcy Code and that
the solicitation of Holders of CMI Common Stock, Series B Preferred Stock and
Old Senior Notes is exempt under Rule 14a-2(a)(4) of the proxy regulations under
the Securities Exchange Act of 1934.

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CONDITIONS TO EFFECTIVE DATE

The Effective Date will not occur and the Plan will not be consummated
unless and until each of the following conditions has been satisfied or waived
by the Debtors and the CMI Equity Committee:

The Confirmation Order in form and substance satisfactory to the
Debtors and the CMI Equity Committee and entered by the Bankruptcy Court shall
not have been modified in any respect.

The Recapitalization Financing shall be funded in accordance with the
terms of the Plan and the respective governing documents for each component of
the Recapitalization Financing.

All other actions and documents necessary to implement the transactions
contemplated to be effected under this Plan on or before the Effective Date
shall have been effected or executed or, if waivable, waived by the Person or
Persons entitled to the benefit thereof.

WAIVER OF CONDITIONS TO EFFECTIVE DATE

Each of the conditions to the Effective Date may be waived in whole or
in part by the Debtors and the CMI Equity Committee at any time, without notice
or an Order of the Bankruptcy Court.

MODIFICATION OR REVOCATION OF THE PLAN; SEVERABILITY

The Debtors and the CMI Equity Committee reserve the right to modify
the Plan at any time prior to the Confirmation Date as provided for by Section
1127 of the Bankruptcy Code or as otherwise permitted by law without additional
disclosure pursuant to Section 1125 of the Bankruptcy Code, except as the
Bankruptcy Court may otherwise order. The potential impact of any such amendment
or modification on the Holders of Interests cannot presently be foreseen, but
may include a change in the economic impact of the Plan on some or all of the
Classes or a change in the relative rights of such Classes.

If after receiving sufficient acceptances but prior to Confirmation of
the Plan, the Debtors and the CMI Equity Committee seek to modify the Plan, the
Debtors and the CMI Equity Committee can use such previously solicited
acceptances only to the extent permitted by applicable law.

The Debtors and the CMI Equity Committee reserve the right after the
Confirmation Date and before the Effective Date to modify the terms of the Plan
or waive any conditions to the effectiveness thereof if and to the extent the
Debtors and the CMI Equity Committee determine that such modifications or
waivers are necessary or desirable in order to consummate the Plan. The Debtors
will give such Holders of Claims and Interests notice of such modifications or
waivers as may be required by applicable law and the Bankruptcy Court, and any
such modifications will be subject to the approval of the Bankruptcy Court to
the extent required by, and in accordance with, Section 1127 of the Bankruptcy
Code.

The CMI Equity Committee will join in modifications proposed by the
Debtors in accordance with the foregoing in the exercise of such Committee's
reasonable discretion.

The Debtors reserve the right to revoke or withdraw the Plan prior to
the Confirmation Date. If the Debtors revoke or withdraw the Plan, or if
Confirmation does not occur, then the Plan will be null and void, and all of the
Debtors' respective obligations with respect to the Claims and Interests will
remain unchanged and nothing contained in the Plan or in this Disclosure
Statement will be deemed an admission or statement against interest or
constitute a waiver or release of any claims by or against any Debtor or any
other Person or to prejudice in any manner the rights of any Debtor or any
Person in any further proceedings involving any Debtor or any Person.

If, prior to Confirmation, any term or provision of the Plan is held by
the Bankruptcy Court to be invalid, void or unenforceable, the Bankruptcy Court
will have the power, upon the request of the Debtors, to alter and

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interpret such term or provision to make it valid or enforceable to the maximum
extent practicable, consistent with the original purpose of the term or
provision held to be invalid, void or unenforceable, and such term or provision
will then be applicable as altered or interpreted. Notwithstanding any such
holding, alteration or interpretation, the remainder of the terms and provisions
of the Plan will remain in full force and effect and will in no way be affected,
impaired or invalidated by such holding, alteration or interpretation. The
Confirmation Order will constitute a judicial determination and will provide
that each term and provision of the Plan, as it may have been altered or
interpreted in accordance with the foregoing, is valid and enforceable pursuant
to its terms.

D. THE REORGANIZED DEBTORS

A description of various matters relating to the Reorganized Debtors
including (i) information relating to the business to be conducted by
Reorganized CMI, CMM and Holdings following the Effective Date, (ii) the
proposed management of Reorganized CMI, CMM and Holdings and proposed
compensation and other arrangements relating thereto, and (iii) certain
corporate governance matters, is set forth or referenced below.

CORPORATE STRUCTURE

On the Effective Date, CMI will become Reorganized CMI, CMM will become
Reorganized CMM, and Holdings will become Reorganized Holdings with no change in
their respective structural relationships.

BUSINESS OF THE COMPANY INCLUDING THE REORGANIZED DEBTORS

Following the Effective Date, the Debtors estimate that the Reorganized
Debtors will have net assets with an approximate value of $__ million. Subject
to restrictions contained in the documents governing the New Debt or New
Securities, the use of such assets (including the possibility of resuming the
acquisition of Subordinated CMBS and the origination and securitization of
commercial mortgage loans) will be left to the discretion of the Board of
Directors of Reorganized CMI.

DIRECTORS AND MANAGEMENT OF REORGANIZED CMI AND REORGANIZED CMM

Board of Directors. Persons to serve as the initial members of the
Board of Directors of Reorganized CMI and Reorganized CMM will be identified at
or before the Confirmation Hearing in a schedule to be filed by CMI and CMM with
the Bankruptcy Court. Such appointments to the respective Boards of Directors
will otherwise be consistent with the Plan of Reorganization.

See "GENERAL INFORMATION - Business - Management" for information
concerning CMI'S existing directors.

EXECUTIVE OFFICERS. The initial officers of Reorganized CMI will be
selected by the Board of Directors of Reorganized CMI. It is anticipated that
the initial officers of Reorganized CMI will be the same as the current officers
of CMI. To the extent that initial officers have been selected, their names will
be disclosed in a schedule to be filed with the Bankruptcy Court on or prior to
the Confirmation Date. Reorganized CMI will negotiate compensation packages with
its officers that are consistent with compensation packages in the industry and,
to the extent applicable, subject to the terms and conditions of assumed
employment agreements.

The initial officers of Reorganized CMM will be selected by the Board
of Directors of Reorganized CMM. It is anticipated that the initial officers of
Reorganized CMM will be the same as the current officers of CMM. To the extent
that initial officers have been selected, their names will be disclosed in a
schedule to be Filed with the Bankruptcy Court on or prior to the Confirmation
Date. Reorganized CMM will negotiate compensation packages with its officers
that are consistent with compensation packages in the industry, and, to the
extent applicable, subject to the terms and conditions of assumed employment
agreements.

See "GENERAL INFORMATION - Business - Management for information
concerning assumed

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employment agreements.

CERTAIN CORPORATE GOVERNANCE MATTERS

REORGANIZED CMI RESTATED ARTICLES OF INCORPORATION AND REORGANIZED CMI
RESTATED BYLAWS. The forms of the Reorganized CMI Restated Articles of
Incorporation and the Reorganized CMI Restated Bylaws will be supplied to the
court on or before the Disclosure Statement Hearing. The CMI Restated Articles
of Incorporation provide for, among other matters, an increase in authorized
shares.

REORGANIZED CMM ARTICLES OF INCORPORATION AND REORGANIZED CMM BYLAWS.
The forms of the Reorganized CMM Articles of Incorporation and the Reorganized
CMM Bylaws will be supplied to the court on or before the Disclosure Statement
Hearing.

SECOND AMENDED AND RESTATED OPTION PLAN. On or prior to the Effective
Date, the Second Amended and Restated Option Plan will be adopted by CMI and, by
voting to accept this Plan, all Holders of Class A21 Interests shall be deemed
to have ratified and approved the Second Amended and Restated Option Plan.
Additionally, upon entry of a Confirmation Order, the Bankruptcy Court shall,
consistent with Maryland and federal law, be deemed to have approved the Second
Amended and Restated Stock Option Plan (including the increase in the number of
shares of common stock with respect to which options may be granted as provided
for therein) on behalf of CMI's shareholders and in satisfaction of Section 422
of the Internal Revenue Code. Following the Effective Date, the Board of
Directors of Reorganized CMI may further amend or modify the Second Amended and
Restated Option Plan in accordance with the terms thereof and any such further
amendment or modification shall not require amendment of the Plan. The Second
Amended and Restated Option Plan amends CMI's Amended and Restated Stock Option
Plan for Key Employees to, among other matters, provide for an increase in the
number of shares of CMI Common Stock with respect to which options may be
granted and address tax and securities law matters.

All option plans in place prior to the Effective Date shall remain in
place after the Effective Date and Reorganized CMI shall continue to honor such
option plans.

E. RECAPITALIZATION FINANCING INCLUDING ISSUANCE OF NEW SECURITIES

On the Effective Date, the Recapitalization Financing shall be funded
and become effective and the CMBS Sale Portfolio, if not already sold, shall be
sold as parts of effectuating consummation of the Plan. On the effective date,
reorganized CMI will issue the New Securities in accordance with the Plan. The
Plan provides that the issuance of the New Securities, and all securities
issuable upon conversion of the New Securities is thereby authorized pursuant to
Section 1145 of the Bankruptcy Code, without further action under applicable
law. In addition, on the Effective Date, the Reorganized Debtors will implement
and, to the extent applicable, receive the proceeds of the New Debt in
accordance with the terms of the applicable documents with respect thereto. On
the Effective Date, all securities, instruments, corporate documents, and
agreements entered into pursuant to or contemplated by the Plan, including,
without limitation, the New Securities, any other security and any instrument,
corporate document, or agreement entered into in connection with any of the
transactions referenced in Section V or Section X.H of the Plan, shall become
effective, binding and enforceable in accordance with their respective terms and
conditions upon the parties thereon without further act or action under
applicable law, regulation, order or rule, and shall be deemed to become
effective simultaneously.

F. SALE OF THE CMBS SALE PORTFOLIO

On or before the Effective Date, the commercial mortgage-backed
securities and any other assets in the CMBS Sale Portfolio shall be sold in
accordance with the terms of the Plan and any Orders with respect thereto
entered by the Bankruptcy Court. The proceeds thereof shall be used to pay
Allowed Secured Claims in accordance with any Orders entered by the Bankruptcy
Court with respect thereto and otherwise used as part of the funding of the
Plan.

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G. POTENTIAL NEW EQUITY INVESTMENT AND RIGHTS OFFERING

Although not required to fund the Plan, the Debtors, in consultation
with the CMI Equity Committee, may seek new equity capital from one or more
investors to partially fund the Reorganized Debtors and the Plan as
Recapitalization Financing. In such event, the Plan will be amended to
appropriately reflect such new equity capital transaction. If new equity capital
is sought, it is likely to take the form of a private issuance of preferred
stock with such relative rights and preferences as may be agreed to consistent
with the terms of the Plan.

In the event new equity capital is sought, from an investor, it is also
anticipated that an offering of rights to purchase common stock or a new series
of preferred stock, with rights and preferences similar to the preferred stock
likely to be issued to the new equity capital investor but with limited voting
rights, would be made to Holders of CMI Common Stock. Such rights offering will
be developed in consultation with the CMI Equity Committee. Such rights offering
would commence on the Effective Date and would be for a percentage of the
aggregate face value of the securities issued to the new equity capital
investor. All or a portion of the proceeds of the rights offering may be used to
redeem at face value the securities issued to the new equity investor.

APPLICABILITY OF FEDERAL AND OTHER SECURITIES LAWS

In reliance upon the exemption provided by Section 1145(a)(1) of the
Bankruptcy Code, the Debtors have not filed a registration statement under the
Securities Act or any other federal or state securities laws with respect to the
New Securities that will be offered pursuant to the Plan, any other securities
issuable upon conversion of the New Securities.

SECTION 1145(a)(1). Section 1145(a)(1) exempts the offer or sale of securities
pursuant to a plan of reorganization from the registration requirements of
Section 5 of the Securities Act and from registration under state and local
securities laws if the following conditions are satisfied: (i) the securities
are issued by a debtor (or its affiliate or successor) under a plan of
reorganization; (ii) the recipients of the securities hold claims against,
interests in, or claims for administrative expenses against the debtor; and
(iii) the securities are issued in exchange for the recipients' claims against
or interests in the debtor, or principally in such exchange and partly for cash
or property.

The New Securities, and all other securities issuable upon conversion
of the New Securities issued pursuant to the Plan will not be "restricted
securities" within the meaning of Rule 144 under the Securities Act and may be
freely transferred by Holders of Allowed Class A9, A10, A16 and A18 Claims and
Interests under the Securities Act and their successors and assigns.
Accordingly, all resales and subsequent transactions in the New Securities, and
any other securities issuable upon conversion of the New Securities are exempt
from registration under the Securities Act pursuant to Section 4(1) of the
Securities Act, unless the Holder is deemed to be an "underwriter" with respect
to such securities or an "affiliate" of an issuer. Section 1145(b) of the
Bankruptcy Code defines four types of "underwriters":

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(i) persons who purchase a claim against, an interest in, or a
claim for administrative expense against the debtor with a view to
distributing any security received in exchange for such a claim or
interest;

(ii) persons who offer to sell securities offered under a plan
for the holders of such securities;

(iii) persons who offer to buy securities from the holders of
such securities, if the offer to buy is (a) with a view to distributing
such securities and (b) made under a distribution agreement; and

(iv) a person who is an "issuer" with respect to the
securities, as the term "issuer" is defined in Section 2(11) of the
Securities Act.

Under Section 2(11) of the Securities Act, an "issuer" includes any
"affiliate" of the issuer, which means any person directly or indirectly through
one or more intermediaries, controlling, controlled by or under common control
with the issuer. Any Holder of an Allowed Claim or Interest (or group of Holders
of such Claims and/or Interests who act in concert) who receives a substantial
amount of any of the New Securities pursuant to the Plan may be deemed to be an
"affiliate" of an issuer and therefore an "issuer" and therefore an
"underwriter" under the foregoing definitions.

Whether or not any particular person would be deemed to be an
"underwriter" or an "affiliate" with respect to any security to be issued
pursuant to the Plan would depend upon various facts and circumstances
applicable to that person. Accordingly, the Debtors express no view as to
whether any person would be an "underwriter" or an "affiliate" with respect to
any security to be issued pursuant to the Plan.

GIVEN THE COMPLEX NATURE OF THE QUESTION OF WHETHER A PARTICULAR PERSON
MAY BE AN UNDERWRITER OR AN AFFILIATE, THE DEBTORS MAKE NO REPRESENTATIONS
CONCERNING THE RIGHT OF ANY PERSON TO TRADE IN THE SECURITIES TO BE TRANSFERRED
PURSUANT TO THE PLAN. THE DEBTORS RECOMMEND THAT HOLDERS OF ALLOWED CLAIMS
CONSULT THEIR OWN COUNSEL CONCERNING WHETHER THEY MAY FREELY TRADE SUCH
SECURITIES.

Rule 144A, promulgated under the Securities Act, provides a
non-exclusive safe harbor exemption from the registration requirements of the
Securities Act for resales to certain "qualified institutional buyers" of
securities which are "restricted securities" within the meaning of the
Securities Act, irrespective of whether the seller of such securities purchased
its securities with a view towards reselling such securities under the
provisions of Rule 144A. Under Rule 144A, a "qualified institutional buyer" is
defined to include, among other persons (E.G., "dealers" registered as such
pursuant to Section 15 of the Exchange Act and "banks" as defined in Section
3(a)(2) of the Securities Act), any entity which purchases securities for its
own account or for the account of another qualified institutional buyer and
which (in the aggregate) owns and invests on a discretionary basis at least $100
million in the securities of unaffiliated issuers. Subject to certain
qualifications, Rule 144A does not exempt the offer or sale of securities which,
at the time of their issuance, were securities of the same class of securities
then listed on a national securities exchange (registered as such under Section
6 of the Exchange Act) or quoted in a U.S. automated interdealer quotation
system (E.G., Nasdaq). Holders of such securities who are deemed to be
"underwriters" within the meaning of Section 1145(b)(1) of the Bankruptcy Code
or who may otherwise be deemed to be "underwriters" of, or to exercise "control"
over, the Company within the meaning of Rule 405 of Regulation C under the
Securities Act should, assuming that all other conditions of Rule 144A are met,
be entitled to avail themselves of the safe harbor resale provisions thereof.

To the extent that Rule 144A is unavailable, holders may, under certain
circumstances, be able to sell their securities pursuant to the more limited
safe harbor resale provisions of Rule 144 under the Securities Act. Generally,
Rule 144 provides that if certain conditions are met (E.G., volume limitations,
manner of sale, availability of current information about the issuer, etc.), any
"affiliate" of the issuer of the securities sought to be resold will not be
deemed to be an "underwriter" as defined in Section 2(11) of the Securities Act.
Under paragraph (k) of Rule

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144, the aforementioned conditions to resale will no longer apply to restricted
securities sold for the account of a holder who is not an affiliate of the
Company at the time of such resale and who has not been such during the
three-month period next preceding such resale, so long as a period of at least
two years has elapsed since the later of (i) the period next preceding such
resale, so long as a period of at least two years has elapsed since the later of
(i) the Effective Date and (ii) the date on which such holder acquired his or
its securities from an affiliate of the Company.

THE NEW SECURITIES TO BE ISSUED ON THE EFFECTIVE DATE, AND THE
SECURITIES ISSUABLE UPON CONVERSION OF THE NEW SECURITIES HAVE NOT BEEN APPROVED
OR DISAPPROVED BY THE SEC OR BY ANY STATE SECURITIES COMMISSION OR SIMILAR
PUBLIC, GOVERNMENTAL OR REGULATORY AUTHORITY AND NEITHER THE SEC NOR SUCH
AUTHORITY HAS PASSED UPON THE ACCURACY OR ADEQUACY OF THE INFORMATION CONTAINED
IN THIS DISCLOSURE STATEMENT OR UPON THE MERITS OF THE PLAN. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENCE.

H. DISTRIBUTIONS UNDER THE PLAN

GENERAL

Reorganized Debtors, or such Person(s) as the Debtors may employ in
their sole discretion, will act as Disbursing Agent under the Plan. The
Disbursing Agent shall make all distributions of Cash required to be distributed
under the applicable provisions of the Plan and the documents evidencing the
Recapitalization Financing. Any Disbursing Agent may employ or contract with
other entities to assist in or make the distributions required by the Plan and
the documents evidencing the Recapitalization Financing. Each Disbursing Agent
will serve without bond, and each Disbursing Agent, without further Bankruptcy
Court approval, reasonable compensation for distribution services rendered
pursuant to the Plan and reimbursement of reasonable out-of-pocket expenses
incurred in connection with such services from the Reorganized Debtors on terms
acceptable to the Reorganized Debtors.

TIMING OF DISTRIBUTIONS

Except as otherwise provided in the Plan with respect to any particular
Class or Claim, property to be distributed hereunder on account of Allowed
Claims and Allowed Interests in an Impaired Class (a) shall be distributed on
the Effective Date or as soon as practicable thereafter to each Holder of an
Allowed Claim or an Allowed Interest in that Class that is an Allowed Claim or
an Allowed Interest as of the Effective Date, and (b) shall be distributed to
each Holder of an Allowed Claim or an Allowed Interest of that Class that
becomes an Allowed Claim or Allowed Interest after the Effective Date, as soon
as practicable after the Order of the Bankruptcy Court allowing such Claim or
Interest becomes a Final Order. Except as otherwise provided in the Plan,
property to be distributed under the Plan on account of an Administrative Claim
shall be distributed on the later of (i) the Effective Date or as soon as
practicable thereafter, or if any Claim is not an Allowed Claim as of the
Effective Date, on the date the Order allowing such Claim becomes a Final Order
or as soon as practicable thereafter, and (ii) the date on which the
distribution to the Holder of the Claim would have been due and payable in the
ordinary course of business or under the terms of the Claim.

METHODS OF DISTRIBUTIONS

CASH PAYMENTS. Cash payments made pursuant to the Plan will be in
United States dollars. Cash payments to foreign creditors may be made, at the
option of the Debtors or the Reorganized Debtors, in such funds and by such
means as are necessary or customary in a particular foreign jurisdiction. Cash
payments made pursuant to the Plan in the form of checks issued by the
Reorganized Debtors shall be null and void if not cashed within 90 days of the
date of the issuance thereof. Requests for reissuance of any check shall be made
directly to the Disbursing Agent as set forth in Section V.G of the Plan. Cash
payments to bank creditors of the Debtors may be by wire transfer.

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COMPLIANCE WITH TAX REQUIREMENTS. In connection with the distributions
set forth herein, to the extent applicable, the Disbursing Agent shall comply
with all tax withholding and reporting requirements imposed on it by any
governmental unit, and all distributions pursuant to this Plan shall be subject
to such withholding and reporting requirements. The Disbursing Agent shall be
authorized to take any and all actions that may be necessary or appropriate to
comply with such withholding and reporting requirements.

Notwithstanding any other provision contained herein: (i) each Holder
of an Allowed Claim or Interest that is to receive a distribution of Cash
pursuant to the Plan shall have sole and exclusive responsibility for the
satisfaction and payment of any tax obligations imposed by any governmental
unit, including income, withholding and other tax obligations, on account of
such distribution; and (ii) no distribution shall be made to or on behalf of
such Holder pursuant to the Plan unless and until such Holder has made
arrangements reasonably satisfactory to the Disbursing Agent for the payment and
satisfaction of such tax obligations. Any distributions pursuant to the Plan
will, pending the implementation of such arrangements, be treated as an
undeliverable distribution pursuant to Section V.G of the Plan.

DISTRIBUTION RECORD DATE. As of the close of business on the
Distribution Record Date, the transfer registers for the Old Securities,
maintained by the Debtors, or their respective agents, will be closed. The
Disbursing Agent and its respective agents and the Indenture Trustee will have
no obligation to recognize the transfer of any Old Securities occurring after
the Distribution Record Date, and will be entitled for all purposes relating to
this Plan to recognize and deal only with those Holders of Record as of the
close of business on the Distribution Record Date.

SURRENDER OF CANCELLED OLD SECURITIES AND EXCHANGE OF OLD SECURITIES FOR NEW
SECURITIES

TENDER OF OLD SECURITIES. The mechanism by which Holders of Allowed
Claims and Allowed Interests surrender their Old Securities in order to receive
Cash, if and as applicable under the Plan, and to exchange such Old Securities
for New Securities (as applicable), shall be determined based upon the manner in
which the Old Securities were issued and the mode in which they are held, as set
forth below.

OLD SECURITIES HELD IN BOOK-ENTRY FORM. Old Securities held in
book-entry form through bank and broker nominee accounts shall be mandatorily
cancelled and (i) Cash distributed, if and as applicable under the Plan, and
(ii) mandatorily exchanged for New Securities (as applicable) through the
facilities of such nominees and the systems of the applicable securities
depository or Clearing System holding such Old Securities on behalf of the
brokers or banks.

OLD SECURITIES IN PHYSICAL, REGISTERED, CERTIFICATED FORM. Each Holder
of Old Securities in physical, registered, certificated form will be required,
on or before the Effective Date, to deliver its physical notes or certificates
(the "Tendered Certificates") to the Disbursing Agent, accompanied by a properly
executed letter of transmittal, to be distributed by the Disbursing Agent after
the Confirmation Date and containing such representations and warranties as are
described in this Disclosure Statement (a "Letter of Transmittal").

Any Cash or New Securities to be distributed pursuant to the Plan on
account of any Allowed Claim or Allowed Interest represented by an Old Security
held in physical, registered, certificated form shall, pending such surrender,
be treated as an undeliverable distribution pursuant to Section V.G of the Plan.

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DELIVERY OF NEW SECURITIES IN EXCHANGE FOR OLD SECURITIES. On the
Effective Date, Reorganized CMI or the Disbursing Agent shall issue and
authenticate the New Securities, and shall apply to DTC to make such New
Securities eligible for deposit at DTC. With respect to Holders of Old
Securities who hold such Old Securities through nominee accounts at bank and
broker participants in DTC or any similar clearing system, the Disbursing Agent
shall deliver such New Securities to DTC or to the registered address specified
by the Clearing System. The Clearing System (or its depositary) shall return the
applicable Old Securities to the Disbursing Agent for cancellation.

The Disbursing Agent will request that DTC effect a mandatory exchange
of the applicable Old Securities for the applicable New Securities by crediting
the accounts of its participants with the applicable New Securities in exchange
for the Old Securities. On the effective date of such exchange, each DTC
participant will effect a similar exchange for accounts of the beneficial owners
holding Old Securities through such firms. Neither the Debtors, Reorganized
Debtors nor the Disbursing Agent shall have any responsibility or liability in
connection with the Clearing Systems' or such participants' effecting, or
failure to effect, such exchanges.

Holders of Old Securities holding such Old Securities outside a
Clearing System will be required to surrender their Old Securities by delivering
them to the Disbursing Agent, along with properly executed Letters of
Transmittal (as described above). The Disbursing Agent shall forward the New
Securities on account of such Old Securities to such Holders.

OTHER MATTERS WITH RESPECT TO THE SURRENDER OF OLD SECURITIES. By
participating in any of the above procedures, each Holder of the Old Securities
will be representing and warranting (and the Letters of Transmittal will so
provide) that among other things, the Holder has full power and authority to
tender, exchange, sell, assign and transfer the Old Securities and that when
such Old Securities are accepted for exchange by the Debtors or the Reorganized
Debtors, the Debtors or the Reorganized Debtors will acquire good, marketable
and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and that the Old Securities are not subject to any
adverse claims or proxies. The Holder also agrees that it will, upon request,
execute and deliver any additional documents deemed by the Disbursing Agent, the
Debtors or the Reorganized Debtors to be necessary or desirable to complete the
exchange, sale, assignment and transfer of the Old Securities Old. All authority
conferred by participating in the above procedures will survive the death or
incapacity of the Holder, and all obligations of the Holder will be binding upon
the heirs, personal representatives, successors and assigns of the Holder.

The surrender of the Old Securities pursuant to any one of the
procedures described in this Disclosure Statement, upon the Debtors' or the
Reorganized Debtors' acceptance for exchange of such Old Securities, constitutes
a binding agreement between the Holder and the Debtors or the Reorganized
Debtors upon the terms, and subject to the conditions, of the Plan.

SPECIAL PROCEDURES FOR LOST, STOLEN, MUTILATED OR DESTROYED
INSTRUMENTS. Any Holder of a Claim or an Interest evidenced by an Instrument
that has been lost, stolen, mutilated or destroyed will, in lieu of surrendering
such Instrument, deliver to the Disbursing Agent: (a) an affidavit of loss or
other evidence reasonably satisfactory to the Disbursing Agent of the loss,
theft, mutilation or destruction; and (b) such security or indemnity as may
reasonably be required by the Disbursing Agent to hold the Disbursing Agent
harmless from any damages, liabilities or costs incurred in treating such
individual as a Holder of an Instrument. Upon compliance with the Plan, the
Holder of a Claim or Interest evidenced by any such lost, stolen, mutilated or
destroyed Instrument shall, for all

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purposes under the Plan and notwithstanding anything to the contrary contained
herein, be deemed to have surrendered such Instrument.

FAILURE TO SURRENDER CANCELLED INSTRUMENT. Any Holder of Old Securities
holding such Old Securities in physical, registered or certificated form who has
not properly completed and returned to the Disbursing Agent a Letter of
Transmittal, together with the applicable Tendered Certificates, within two
years after the Effective Date shall have its claim for a distribution pursuant
to the Plan on account of such Instrument discharged and shall be forever barred
from asserting any such claim against Reorganized CMI, Reorganized CMM or
Reorganized Holdings or their properties. In such cases, any Cash or New
Securities held for distribution on account of such claim shall be disposed of
pursuant to the provisions of Section V.G of the Plan.

RELEASE OF SECURITY INTERESTS IN OR OTHER CLAIMS TO OR AGAINST ASSETS OR
PROPERTY OF THE REORGANIZED DEBTORS BY CREDITORS PAID PURSUANT TO THE PLAN

Any Holder of a Secured Claim whose Secured Claim is being paid in full
in accordance with Section IV.C, IV.D or IV.E of the Plan shall cooperate in all
respects with the Reorganized Debtors and shall execute such documents and
release and return to the Reorganized Debtors such assets or property of the
Debtors or Reorganized Debtors, as applicable, that such creditor is holding,
directly or indirectly, as collateral and, if applicable, unwind any alleged
repurchase agreements or claims to assets or property subject to such alleged
repurchase agreements. Furthermore, any and all Holders of such Secured Claims
shall execute such documents and take such actions as may be reasonably required
by the Reorganized Debtors to effectuate the transfer or retransfer back to the
reorganized debtors of all collateral security, or assets or property held
subject to alleged repurchase agreements, free and clear of all liens, security
interests, claims or interests in or to such collateral, assets or property by
such Holder, and shall confirm the foregoing in writing if requested by the
Reorganized Debtors.

DELIVERY OF DISTRIBUTIONS; UNDELIVERABLE OR UNCLAIMED DISTRIBUTIONS

Any Person that is entitled to receive a Cash distribution under the
Plan but that fails to cash a check within 90 days of its issuance shall be
entitled to receive a reissued check from Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, for the amount of the original check,
without any interest, if such Person requests the Disbursing Agent to reissue
such check and provides the Disbursing Agent with such documentation as the
Disbursing Agent reasonably requests to verify that such Person is entitled to
such check, prior to the second anniversary of the Effective Date. If a Person
fails to cash a check within 90 days of its issuance and fails to request
reissuance of such check prior to the second anniversary of the Effective Date,
such Person shall not be entitled to receive any distribution under the Plan.

Subject to Bankruptcy Rule 9010, all distributions to any Holder of an
Allowed Claim or an Allowed Interest shall be made to the address of such Holder
on the books and records of the Debtors or their agents, unless Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as applicable, has been notified in
writing of a change of address. If the distribution to any Holder of an Allowed
Claim or Allowed Interest is returned to a Disbursing Agent as undeliverable,
such Disbursing Agent shall use reasonable efforts to determine the current
address of such Holder, but no distribution shall be made to such Holder unless
and until the applicable Disbursing Agent has determined or is notified in
writing of such Holder's then-current address, at which time such distribution
shall be made to such Holder without any additional interest on such
distribution after the Effective Date. Undeliverable distributions shall remain
in the possession of the applicable Disbursing Agent pursuant to Section VI.A of
the Plan until such time as a distribution becomes deliverable. Undeliverable
Cash or New Securities shall be held in trust by the applicable Disbursing Agent
for the benefit of the potential claimants of such funds or securities, and will
be accounted for separately. Any Disbursing Agent holding undeliverable Cash
shall invest such Cash in a manner consistent with the Debtors' investment and
deposit guidelines. Any interest paid, and any other amounts earned, with
respect to such undeliverable Cash pending its distribution in accordance with
this Plan shall be property of Reorganized CMI, Reorganized CMM or Reorganized
Holdings, as the case may be. Undeliverable New Securities will be held in trust
for the benefit of the potential claimants of such securities by the Disbursing
Agent in principal amounts or numbers of shares sufficient to fund the unclaimed
amounts of such New Securities

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and will be accounted for separately. Any unclaimed or undeliverable
distributions (including Cash and New Securities) shall be deemed unclaimed
property under Section 347(b) of the Bankruptcy Code at the expiration of two
years after the Effective Date and, after such date, all such unclaimed property
shall revert to Reorganized CMI, Reorganized CMM, or Reorganized Holdings, as
the case may be, and the Claim or Interest of any Holder with respect to such
property shall be discharged and forever barred.

The Plan provides that the Disbursing Agent will make all distributions
required under the applicable provisions of the Plan. No distributions under the
Plan will be made to or on behalf of any Holder of any Allowed Claim or Allowed
Interest evidenced by the instruments, securities or other documentation to the
Disbursing Agent. See "THE PLAN OF REORGANIZATION - Distributions Under the Plan
- - Surrender of Canceled Old Securities."

I. GENERAL INFORMATION CONCERNING THE PLAN

PROCEDURES FOR TREATING DISPUTED CLAIMS UNDER PLAN OF REORGANIZATION

PROCESS. If any of the Debtors disputes any Claim, such dispute shall
be determined, resolved or adjudicated, as the case may be, under applicable
law, and such Claim shall survive the Effective Date to the extent that such
Claim has not been allowed and has not received the treatment afforded the Class
of Claims in which such Claim is classified under this Plan on or before the
Effective Date. Among other things, any Debtor may elect, at its sole option, to
object or seek estimation under Section 502 of the Bankruptcy Code with respect
to any proof of claim filed by or on behalf of a Holder of a Claim or any proof
of interest filed by or on behalf of a Holder of an Interest.

TORT CLAIMS. All Tort Claims are Disputed Claims. Any unliquidated Tort
Claim that is not otherwise settled or resolved pursuant to Section V.H.l.a of
the Plan shall be determined and liquidated under applicable law in the
Bankruptcy Court or the administrative or judicial tribunal in which it is
pending on the Confirmation Date or, if no such action was pending on the
Confirmation Date, in the Bankruptcy Court or any administrative or judicial
tribunal of appropriate jurisdiction. Pursuant to Section IX.E of the Plan, the
automatic stay arising pursuant to Section 362 of the Bankruptcy Code shall be
vacated as of the Effective Date as to all Tort Claims. Any Tort Claim
determined and liquidated pursuant to a judgment obtained in accordance with
Section V.H. l.b of the Plan and applicable non-bankruptcy law that is no longer
subject to appeal or other review shall be deemed to be an Allowed Claim in
Class A10, B5 or C5, as applicable, in such liquidated amount and satisfied in
accordance with the Plan. Nothing contained in Section V.H.l.b of the Plan shall
constitute or be deemed a waiver of any claim, right or cause of action that the
Debtors or the Reorganized Debtors may have against any Person in connection
with or arising out of any Tort Claim, including, without limitation, any rights
under Section 157(b) of title 28, United States Code.

OBJECTIONS TO CLAIMS AND INTERESTS. Except insofar as a Claim or
Interest is allowed hereunder, Reorganized CMI, Reorganized CMM and Reorganized
Holdings shall be entitled and reserve the right to object to Claims and
Interests. Except as otherwise provided in Section V.H.3 of the Plan and except
as otherwise ordered by the Bankruptcy Court, objections to any Claim or
Interest, including, without limitation, Administrative Claims, shall be Filed
and served upon the Holder of such Claim or Interest no later than 90 days after
the Effective Date, unless such period, is, extended by the Bankruptcy Court,
which extension may be granted on an ex parte basis without notice or hearing.
After the Confirmation Date, only the Debtors, Reorganized CMI, Reorganized CMM
or Reorganized Holdings shall have the authority to File, settle, compromise,
withdraw, or litigate to judgment objections to Claims and Interests. From and
after the Confirmation Date, the Debtors, Reorganized CMI, Reorganized CMM or
Reorganized Holdings may settle or compromise any Disputed Claim or Disputed
Interest without approval of the Bankruptcy Court. Except as (i) specified
otherwise herein, or (ii) ordered by the Bankruptcy Court, all Disputed Claims
or Disputed Interests shall be resolved by the Bankruptcy Court. The failure of
the Debtors to object to any Claim or Interest for voting purposes shall not be
deemed to be a waiver of the Debtors' or Reorganized Debtors' right to object to
any Claim or Interest in whole or in part thereafter.

PROFESSIONALS, CLAIMS. Except as otherwise ordered by the Bankruptcy
Court, objections to Claims of professionals shall be governed by the provisions
of Section IV.A.3.b of the Plan.

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NO DISTRIBUTIONS PENDING ALLOWANCE. Notwithstanding any other
provisions of the Plan, no payments or distributions will be made on account of
a Disputed Claim or a Disputed Interest until such Claim or Interest becomes an
Allowed Claim or Allowed Interest.

DISTRIBUTIONS ON ACCOUNT OF DISPUTED CLAIMS AND INTERESTS ONCE THEY ARE
ALLOWED. Within 30 days after the end of each calendar quarter following the
Effective Date, the applicable Disbursing Agent will make all distributions on
account of any Disputed Claim or Disputed Interest that has become an Allowed
Claim or Allowed Interest during the preceding calendar quarter. Such
distributions will be made pursuant to the provisions of the Plan governing the
applicable Class. Holders of Disputed Claims or Disputed Interests that are
ultimately allowed will also be entitled to receive, on the basis of the amount
ultimately allowed: (i) matured and payable interest, if any, at the rate
provided for the Class to which such Claim belongs; and (ii) any interest
payments, dividends or other payments made to the Class to which such Claim or
Interest belongs, but held pending distribution.

SETOFFS

Except with respect to any contract, instrument, release, indenture or
other agreement or document created in connection with the Plan, the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be,
may, pursuant to Section 553 or section 502(d) of the Bankruptcy Code or
applicable nonbankruptcy law, set off against any Allowed Claim and the
distributions to be made pursuant to the Plan on account of such Claim (before
any distribution is made on account of such Claim), the claims, rights and
causes of action of any nature that the Debtors, Reorganized CMI, Reorganized
CMM or Reorganized Holdings may hold against the Holder of such Allowed Claim;
provided, however, that neither the failure to effect such a setoff nor the
allowance of any Claim hereunder shall constitute a waiver or release by the
Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings of any such
claims, rights and causes of action that the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings may possess against such Holder.

TERMINATION OF SUBORDINATION

The classification and manner of satisfying all Claims and Interests
under the Plan and the distributions thereunder take into consideration all
contractual, legal and equitable subordination rights, whether arising under any
agreement, general principles of equitable subordination, Section 510 of the
Bankruptcy Code or otherwise, that a Holder of a Claim or Interest may have
against other Claim or Interest Holders with respect to any distribution made
pursuant to the Plan. On the Effective Date, all contractual, legal or equitable
subordination rights that such Holder may have with respect to any distribution
to be made pursuant to the Plan shall be deemed to be waived, discharged and
terminated, and all actions related to the enforcement of such subordination
rights will be permanently enjoined. Accordingly, distributions pursuant to the
Plan to Holders of Allowed Claims and Allowed Interests shall not be subject to
payment to a beneficiary of such terminated subordination rights, or to levy,
garnishment, attachment or other legal process by any beneficiary of such
terminated subordination rights.

INDIVIDUAL HOLDER PROOFS OF INTEREST

Individual Holders of Interests in Classes A14, A16, A18, A20, A21,
A22, B7 and C7 are not required to File proofs of Interests unless they disagree
with the number of shares set forth on the applicable stock register.

TREATMENT OF EXECUTORY CONTRACTS AND UNEXPIRED LEASES

ASSUMPTIONS. Except as otherwise provided herein, on the Effective
Date, pursuant to Section 365 of the Bankruptcy Code, the Debtors will assume
each executory contract and unexpired lease entered into by the Debtors prior to
the Petition Date that has not previously (a) expired or terminated pursuant to
its own terms or (b) been assumed or rejected pursuant to Section 365 of the
Bankruptcy Code. The Confirmation Order will constitute an Order of the
Bankruptcy Court approving the assumptions described in Section VII.A of the
Plan, pursuant to Section 365 of the Bankruptcy Code, as of the Effective Date.

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CURE OF DEFAULTS IN CONNECTION WITH ASSUMPTION. Any monetary amounts by
which each executory contract and unexpired lease to be assumed pursuant to the
Plan is in default will be satisfied, pursuant to Section 365(b)(1) of the
Bankruptcy Code, at the option of the Debtors, Reorganized CMI, Reorganized CMM
or Reorganized Holdings, as the case may be: (a) by payment of the default
amount in Cash on the Effective Date or as soon as practicable thereafter; or
(b) on such other terms as are agreed to by the parties to such executory
contract or unexpired lease.

If there is a dispute regarding: (i) the amount of any cure payments;
(ii) the ability of Reorganized CMI, Reorganized CMM or Reorganized Holdings to
provide "adequate assurance of future performance" (within the meaning of
Section 365 of the Bankruptcy Code) under the contract or lease to be assumed;
or (iii) any other matter pertaining to assumption, the cure payments required
by Section 365(b)(1) of the Bankruptcy Code will be made following the entry of
a Final Order resolving the dispute and approving the assumption.

REJECTIONS. Except as otherwise provided in the Plan on the Effective
Date, pursuant to Section 365 of the Bankruptcy Code, the Debtors will reject
each of the executory contracts and unexpired leases listed on a schedule to be
filed prior to the Confirmation Hearing (the "Contract Rejection Schedule")
provided, however, that the Debtors reserve the right, at any time prior to the
Effective Date, to amend such schedule to delete any executory contract or
unexpired lease listed therein, thus providing for its assumption pursuant to
Sections VII.A and B of the Plan. Each contract and lease listed on the Contract
Rejection Schedule will be rejected only to the extent that any such contract or
lease constitutes an executory contract or unexpired lease. Listing a contract
or lease on the Contract Rejection Schedule does not constitute an admission by
the Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings that such
contract or lease is an executory contract or unexpired lease or that the
Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings has any
liability thereunder. The Confirmation Order shall constitute an Order of the
Bankruptcy Court approving such rejections, pursuant to Section 365 of the
Bankruptcy Code, as of the Effective Date.

BAR DATE FOR REJECTION DAMAGES. If the rejection of an executory
contract or unexpired lease pursuant to Section VII.C of the Plan gives rise to
a Claim by the other party or parties to such contract or lease, such Claim
shall be forever barred and shall not be enforceable against the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings, their successors or
properties unless (a) a stipulation with respect to the amount and nature of
such Claim has been entered into by either of the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as applicable, and the Holder of such
Claim in connection with the rejection of such executory contract or unexpired
lease, or (b) a Proof of Claim is Filed and served on Reorganized CMI,
Reorganized CMM or Reorganized Holdings, as the case may be, and counsel for
Reorganized CMI, Reorganized CMM or Reorganized Holdings, as the case may be,
within 30 days after the Effective Date or such earlier date as established by
the Bankruptcy Court. Unless otherwise ordered by the Bankruptcy Court, all
Allowed Claims arising from the rejection of executory contracts and unexpired
leases shall be treated as Claims in Class A10, B5 or C5 as applicable.

CONTINUATION OF CERTAIN RETIREMENT AND OTHER BENEFITS. All employment,
retirement and other related agreements and incentive compensation plans and
programs to which CMI, CMM or Holdings is a party are treated as executory
contracts under the Plan and will be assumed or rejected pursuant to Section VII
of the Plan and Sections 365 and 1123 of the Bankruptcy Code.

EXECUTORY CONTRACTS AND UNEXPIRED LEASES ENTERED INTO AND OTHER
OBLIGATIONS INCURRED AFTER THE PETITION DATE. Executory contracts and unexpired
leases entered into and other obligations incurred after the Petition Date by
the Debtors will be performed by the Debtors or the Reorganized Debtors, in the
ordinary course of their businesses. Accordingly, such executory contracts,
unexpired leases and other obligations will, except as provided in such
contracts, leases or other obligations, survive and remain unaffected by entry
of the Confirmation Order.

LEGAL EFFECTS OF THE PLAN

CONTINUED CORPORATE EXISTENCE; VESTING OF ASSETS IN REORGANIZED CMI,
CMM AND HOLDINGS.

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Reorganized CMI will exist after the Effective Date as a separate corporate
entity, with all the powers of a corporation under the general corporate law of
Maryland. Reorganized CMM will exist after the Effective Date as a separate
corporate entity, with all the powers of a corporation under the general
corporate law of Maryland. Reorganized Holdings will exist after the Effective
Date as a separate limited partnership entity with all the powers of a limited
partnership under the applicable partnership law of Delaware. Except as
otherwise provided in the Plan or the Confirmation Order, on the Effective Date,
all property of CMI's Estate will vest in Reorganized CMI, all property of CMM's
Estate will vest in Reorganized CMM, and all property of Holdings Estate will
vest in Reorganized Holdings, all free and clear of all Claims, liens,
encumbrances and Interests of Holders of Claims and Holders of Old Securities.
From and after the Effective Date, Reorganized CMI, CMM and Holdings may operate
their business and use, acquire, and dispose of property and settle and
compromise claims or interests arising on or after the Effective Date without
supervision by the Bankruptcy Court and free of any restrictions of the
Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy Rules, other than
those restrictions expressly imposed by the Plan or the Confirmation Order.

CANCELLATION OF OLD SECURITIES AND RELATED AGREEMENTS. On the Effective
Date except as otherwise provided by the Plan the Old Securities and all
instruments, indentures and agreements evidencing or governing such Old
Securities will be deemed terminated, cancelled, extinguished and of no further
force or effect wtihout any further action on the part of the Bankruptcy Court,
or any person or any government entity or agency, and except as otherwise
provided in the Plan, CMI, CMM and Holdings, will be released from any and all
obligations under such securities, instruments, indentures and agreements.
Holders of cancelled Old Securities will have no rights arising from or relating
to such Old Securities or the cancellation thereof, except the rights provided
pursuant to the Plan.

NO FURTHER CORPORATE ACTION. Each of the matters provided for under the
Plan involving the corporate structure of any Debtor or Reorganized Debtor or
corporate action to be taken by or required of any Debtor or Reorganized Debtor
shall, as of the Effective Date, be deemed to have occurred and be effective as
provided in the Plan, and shall be authorized and approved in all respects
without any requirement of further action by stockholders or directors of any of
the Debtors or Reorganized Debtors.

IMPLEMENTATION. The Debtors, Reorganized CMI, Reorganized CMM and
Reorganized Holdings are authorized and directed by the Plan to take all
necessary steps, and perform all necessary acts, to consummate the terms and
conditions of the Plan on and after the Effective Date. On or before the
Effective Date, the Debtors may file with the Bankruptcy Court such agreements
and other documents as may be necessary or appropriate to effectuate or further
evidence the terms and conditions of the Plan and the other agreements referred
to herein or contemplated by the Plan.

EFFECTUATING DOCUMENTS AND ACTIONS. The Debtors, Reorganized CMI,
Reorganized CMM and Reorganized Holdings, as the case may be, and each of their
respective appropriate officers shall be authorized to execute and deliver such
contracts, instruments, releases, and other agreements or documents and take
such other actions as may be necessary or appropriate to effectuate and further
evidence the terms and conditions of the Plan, the transactions provided for in
the Plan and all other actions in connection therewith.

DISCHARGE OF DEBTORS AND INJUNCTION. Except as otherwise provided in
the Plan or the Confirmation Order: (i) on the Effective Date, the Debtors shall
be deemed discharged and released to the fullest extent permitted by Section
1141 of the Bankruptcy Code from all Claims and Interests, including, but not
limited to, demands, liabilities, Claims and Interests that arose before the
Effective Date and all debts of the kind specified in Sections 502(g), 502(h) or
502(i) of the Bankruptcy Code, whether or not (a) a proof of Claim or proof of
Interest based on such debt or Interest is Filed or deemed Filed pursuant to
Section 501 of the Bankruptcy Code, (b) a Claim or Interest based on such debt
or Interest is allowed pursuant to Section 502 of the Bankruptcy Code, or (c)
the Holder of a Claim or Interest based on such debt or Interest has accepted
the Plan; and (ii) all Persons shall be precluded from asserting against
Reorganized CMI, Reorganized CMM and Reorganized Holdings, their respective
successors, or their respective assets or properties any other or further Claims
or Interests based upon any act or omission, transaction, or other activity of
any kind or nature that occurred prior to the Effective Date. Except as
otherwise provided in the Plan or the Confirmation Order shall act as a
discharge of any and all Claims against and

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all debts and liabilities of the Debtors, as provided in Sections 524 and 1141
of the Bankruptcy Code, and such discharge shall void any judgment against the
Debtors at any time obtained to the extent that it relates to a Claim
discharged.

Except as otherwise provided in the Plan or the Confirmation Order, on
and after the Effective Date, all Persons who have held, currently hold or may
hold a debt, Claim or Interest discharged pursuant to the terms of the Plan are
permanently enjoined from taking any of the following actions on account of any
such discharged debt, Claim or Interest: (i) commencing or continuing in any
manner any action or other proceeding against the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings, or their respective successors or their
respective properties; (ii) enforcing, attaching, collecting or recovering in
any manner any judgment, award, decree or order against the Debtors, Reorganized
CMI, Reorganized CMM or Reorganized Holdings, or their respective successors or
their respective properties; (iii) creating, perfecting or enforcing any lien or
encumbrance against the Debtors, Reorganized CMI, Reorganized CMM or Reorganized
Holdings, or their respective successors or their respective properties; and
(iv) commencing or continuing any action, in any manner, in any place that does
not comply with or is inconsistent with the provisions of the Plan or the
Confirmation Order. Any Person, including but not limited to the Debtors,
Reorganized CMI, Reorganized CMM or Reorganized Holdings, injured by any willful
violation of such injunction shall recover actual damages, including costs and
attorneys' fees, and, in appropriate circumstances, may recover punitive
damages, from the willful violator.

LIMITATION OF LIABILITY. None of the Debtors, Reorganized CMI,
Reorganized CMM or Reorganized Holdings, the members of the Committees, the
Indenture Trustee, or any of their respective employees, officers, directors,
agents, or representatives, or any professional persons employed by any of them
(including, without limitation, their respective Designated Professionals),
shall have any responsibility, or have or incur any liability, to any Person
whatsoever (i) for any matter expressly approved or directed by the Confirmation
Order or (ii) under any theory of liability (except for any claim based upon
willful misconduct or gross negligence) for any act taken or omission made in
good faith directly related to formulating, implementing, confirming, or
consummating the Plan, the Disclosure Statement, or any contract, instrument,
release or other agreement or document created in connection with or
contemplated by the Plan; provided, that nothing in Section XI.B of the Plan
shall limit the liability of any Person for breach of any express obligation it
has under the terms of this Plan or any documents executed in connection
therewith or pursuant thereto or under any other agreement other document
entered into by such Person in accordance with or pursuant to the terms of this
Plan (except to the extent expressly provided in the Confirmation Order) or for
any breach of a duty of care owed to any other Person occurring after the
Effective Date.

RELEASES. On the Effective Date, each of the Debtors shall release
unconditionally, and hereby is deemed to release unconditionally (i) each of the
Debtors' then-current and former officers, directors, shareholders, employees,
consultants, attorneys, accountants, financial advisors and other
representatives (solely in their capacities as such) (collectively, the "Debtor
Releasees") and (ii) the Committees and, solely in their capacity as members or
representatives of the Committees, each member, consultant, attorney,
accountant, financial advisor or other representative of the Committees
(collectively the "Committee Releasees") from any and all claims, obligations,
suits, judgments, damages, rights, causes of action and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter arising,
in law, equity or otherwise, based in whole or in part upon any act or omission,
transaction, event or other occurrence taking place on or prior to the Effective
Date in any way relating to the Reorganization Cases, the Plan or this
Disclosure Statement.

On the Effective Date, each Holder of a Claim or Interest shall be
deemed to have unconditionally released the Debtor Releasees, the Committee
Releasees and each of their then-current and former officers, directors,
shareholders, employees, consultants, attorneys, accountants, financial advisors
and other representatives (solely in their capacities as such) from any and all
claims, obligations, suits, judgments, damages, rights, causes of action and
liabilities whatsoever which any such holder may be entitled to assert, whether
known or unknown, foreseen or unforeseen, existing or hereafter arising, in law,
equity or otherwise, based in whole or in part upon any act or omission,
transaction, event or other occurrence taking place on or prior to the Effective
Date in any way relating to CMI, CMM and/or Holdings, the Debtors, the
Reorganization Cases, the Plan or the Disclosure Statement,

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excepting, however, from such release any obligation owing to a Holder of an
Allowed Claim or Allowed Interest provided for in this Plan or the Confirmation
Order.

INDEMNIFICATION. The obligations of the Debtors as of the Petition Date
to indemnify their present and former directors or officers, respectively,
against any obligations pursuant to the Debtors' articles of incorporation,
by-laws, applicable state law or specific agreement or resolution, or any
combination of the foregoing, shall survive confirmation of the Plan, remain
unaffected thereby, be assumed by Reorganized CMI, Reorganized CMM or
Reorganized Holdings, as the case may be, and not be discharged. The Debtors
shall fully indemnify, and Reorganized CMI, Reorganized CMM or Reorganized
Holdings, as the case may be, shall assume the Debtors' obligations to
indemnify, any person by reason of the fact that he or she is or was serving as
a director, officer, employee, agent, professional, member, or other authorized
representative (in each case, as applicable) of any of the Debtors
(collectively, the "Indemnitees") against any claims, liabilities, actions,
suits, damages, fines, judgments or expenses (including reasonable attorneys'
fees and expenses), arising during the course of, or otherwise in connection
with or in any way related to, the negotiation, preparation, formulation,
solicitation, dissemination, implementation, confirmation and consummation of
the Plan and the transactions contemplated thereby and the Disclosure Statement
in support thereof, provided, however, that the foregoing indemnification shall
not apply to any liabilities arising from the gross negligence or willful
misconduct of any Indemnitee. If any claim, action or proceeding is brought or
asserted against an Indemnitee in respect of which indemnity may be sought from
Reorganized CMI, Reorganized CMM or Reorganized Holdings, the Indemnitee shall
promptly notify Reorganized CMI, in writing and, in any such event, Reorganized
CMI shall assume the defense thereof including the employment of counsel
reasonably satisfactory to the Indemnitee, and the payment of all expenses of
such Indemnitee. The Indemnitee shall have the right to employ separate counsel
in any such claim, action or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the Indemnitee unless (a) Reorganized CMI has agreed to pay the fees and
expenses of such counsel, or (b) Reorganized CMI shall have failed to assume
promptly the defense of such claim, action or proceeding or to employ counsel
reasonably satisfactory to the Indemnitee in any such claim action or
proceeding, or (c) the named parties in any such claim, action or proceeding
(including any impleaded parties) include both the Indemnitee and Reorganized
CMI, Reorganized CMM or Reorganized Holdings, as the case may be, and the
Indemnitee believes, in the exercise of its business judgment and in the opinion
of its legal counsel, reasonably satisfactory to Reorganized CMI, that the joint
representation of Reorganized CMI, Reorganized CMM or Reorganized Holdings, as
the case may be, and the Indemnitee will likely result in a conflict of interest
(in which case, if the Indemnitee notifies Reorganized CMI in writing that it
elects to employ separate counsel at the expense of Reorganized CMI, Reorganized
CMI shall not have the right to assume the defense of such action or proceeding
on behalf of the Indemnitee). In addition, neither Reorganized CMI, nor
Reorganized CMM nor Reorganized Holdings shall effect any settlement or release
from liability in connection with any matter for which the Indemnitee would have
the right to indemnification from Reorganized CMI, Reorganized CMM or
Reorganized Holdings unless such settlement contains a full and unconditional
release of the Indemnitee, or a release of the Indemnitee reasonably
satisfactory in form and substance to the Indemnitee.

VESTING OF ASSETS. Except as otherwise provided in the Plan or the
Confirmation Order, on the Effective Date, all property of CMI's Estate shall
vest in Reorganized CMI and all property of CMM's Estate shall vest in
Reorganized CMM and all property of Holdings' estate shall vest in Reorganized
Holdings, all free and clear of all Claims, liens, encumbrances and Interests of
Holders of Claims and Holders of Old Securities. From and after the Effective
Date, Reorganized CMI, Reorganized CMM and Reorganized Holdings may operate
their business and use, acquire and dispose of property and settle and
compromise claims or interests arising on or after the Effective Date without
supervision by the Bankruptcy Court and free of any restrictions of the
Bankruptcy Code, the Bankruptcy Rules or the Local Bankruptcy Rules, other than
those restrictions expressly imposed by the Plan or the Confirmation Order.

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PRESERVATION OF CAUSES OF ACTION. Except as otherwise provided herein,
or in any contract, instrument, release or other agreement entered into in
connection with or pursuant to the Plan, Reorganized CMI, Reorganized CMM and
Reorganized Holdings shall retain (and may enforce) any claims, rights and
causes of action that the Debtors or the Estates may hold against any Person,
including, but not limited to, any claims, rights or causes of action under
Sections 544 through 550 of the Bankruptcy Code or any similar provisions of
state law, or any other statute or legal theory.

RETENTION OF BANKRUPTCY COURT JURISDICTION. To the maximum extent
permitted by the Bankruptcy Code and other applicable law, the Bankruptcy Court
shall have jurisdiction of all matters arising out of, and related to, the
Reorganization Cases and the Plan pursuant to, and for the purpose of, Sections
105(a) and 1142 of the Bankruptcy Code, including, without limitation,
jurisdiction to:

1. Allow, disallow, determine, liquidate, classify, estimate or establish the
priority or secured or unsecured status of any Claim or Interest, including the
resolution of any request for payment of any Administrative Claim, the
resolution of any objections to the allowance or priority of Claims or Interests
and the resolution of any dispute as to the treatment necessary to Reinstate a
Claim pursuant to the Plan;

2. Grant or deny any applications for allowance of compensation or reimbursement
of expenses authorized pursuant to the Bankruptcy Code or the Plan, for periods
ending before the Effective Date;

3. Resolve any matters related to the assumption or rejection of any executory
contract or unexpired lease to which any of the Debtors is a party or with
respect to which any of the Debtors may be liable, and to hear, determine and,
if necessary, liquidate any Claims arising therefrom;

4. Ensure that distributions to Holders of Allowed Claims or Allowed Interests
are accomplished pursuant to the provisions of the Plan;

5. Decide or resolve any motions, adversary proceedings, contested or litigated
matters and any other matters and grant or deny any applications involving the
Debtors, Reorganized CMI, Reorganized CMM or Reorganized Holdings that may be
pending on the Effective Date;

7. Resolve any cases, controversies, suits or disputes that may arise in
connection with the consummation, interpretation or enforcement of the Plan or
the Confirmation Order, including the release and injunction provisions set
forth in and contemplated by the Plan and the Confirmation Order, or any
entity's rights arising under or obligations incurred in connection with the
Plan or the Confirmation Order;

8. Enter such Orders as may be necessary or appropriate to correct any defect,
cure any omission, or reconcile any inconsistency in this Plan or the
Confirmation Order as may be necessary to carry out the purposes and intent of
the Plan;

9. Enter such Orders as may be necessary or appropriate to enforce, implement or
interpret the terms and conditions of this Plan and resolve any objections filed
with respect to any actions proposed to be taken in connection with or pursuant
to the provisions of the Plan;

10. Enter such Orders as may be necessary or appropriate to approve agreements,
settlements or compromises in connection with matters pending on the Effective
Date or arising thereafter in connection with implementation of provisions of
the Plan;

11. Determine all adversary proceedings and contested matters to recover or
enforce rights with respect to property of any of the Debtors or their Estates
or to obtain other relief relating to causes of actions or claims under the
Bankruptcy Code or other applicable law including, but not limited to, any
actions brought under Sections 541 through 553 of the Bankruptcy Code;

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12. Determine matters concerning state, local or federal taxes pursuant to
Sections 346, 505, 525, 1146 and any other tax-related provisions of the
Bankruptcy Code;

13. Enter such Orders as may be necessary or appropriate to enforce and
interpret the provisions of the Confirmation Order;

14. Subject to any restrictions on modifications provided herein or in any
contract, instrument, release, indenture or other agreement or document created
in connection with the Plan, modify this Plan before or after the Effective Date
pursuant to Section 1127 of the Bankruptcy Code or modify the Disclosure
Statement, the Confirmation Order or any contract, instrument, release,
indenture or other agreement or document created in connection with or pursuant
to the Plan, the Disclosure Statement or the Confirmation Order, or remedy any
defect or omission or reconcile any inconsistency in any Bankruptcy Court Order,
the Plan, the Disclosure Statement, the Confirmation Order or any contract,
instrument, release, indenture or other agreement or document created in
connection with or pursuant to the Plan, the Disclosure Statement or the
Confirmation Order, in such manner as may be necessary or appropriate to
consummate the Plan, to the extent authorized by the Bankruptcy Code;

15. Issue injunctions, enter and implement other Orders or take such other
actions as may be necessary or appropriate to restrain interference by any
entity with consummation, implementation or enforcement of the Plan or the
Confirmation Order;

16. Enter and implement such Orders as are necessary or appropriate if the
Confirmation Order is for any reason modified, stayed, reversed, revoked or
vacated;

17. Except as otherwise provided in the Plan, or with respect to specific
matters, in the Confirmation Order or any other Order entered in connection with
the Reorganization Cases, determine any other matters that may arise in
connection with or relating to the Plan, this Disclosure Statement, the
Confirmation Order or any contract, instrument, release, indenture or other
agreement or document created in connection with or pursuant to the Plan, this
Disclosure Statement or the Confirmation Order; and

18. Enter an Order or Orders closing the Reorganization Cases.

FAILURE OF BANKRUPTCY COURT TO EXERCISE JURISDICTION. If the Bankruptcy
Court abstains from exercising or declines to exercise jurisdiction, or is
otherwise without jurisdiction over any matter arising out of the Reorganization
Cases, including the matters set forth in Section XI.G of the Plan, Section XI.G
of the Plan shall not prohibit or limit the exercise of jurisdiction by any
other court having competent jurisdiction with respect to such matter.

Committees. On the Effective Date, all Committees, shall be dissolved
and the members of such Committees and their professionals shall be released and
discharged from all further rights and duties arising from or related to the
Reorganization Cases. The professionals retained by such Committees and the
members thereof shall not be entitled to compensation or reimbursement of
expenses incurred for services rendered after the Effective Date other than for
services rendered in connection with any application for allowance of
compensation and reimbursement of expenses pending as of, or timely Filed after,
the Effective Date.

VI. CONFIRMATION AND CONSUMMATION PROCEDURES

A. SOLICITATION OF ACCEPTANCES

As permitted by the Bankruptcy Code, the Debtors are soliciting, in
good faith and in compliance with the applicable provisions of the Bankruptcy
Code, the acceptance of the Plan by all Classes of Claims and Interests that are
"Impaired" under the Plan and that are entitled to vote on the Plan. The
solicitation of acceptances from Holders of Claims or Interests in unimpaired
Classes is not required under the Bankruptcy Code. The following Classes are
Impaired and are entitled to vote on the Plan:

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Classes A1, A2, A3, A4, A5, A6, A7, A9, A10, A11, A13, A16, A18, A21, B1, B2,
B5, B6, C1, C2, C5 and C6.

A plan is accepted by an impaired class of claims if holders of at
least two-thirds in dollar amount and more than one-half in number of claims of
that class vote to accept the plan. A plan is accepted by an impaired class of
interests if holders of at least two-thirds in amount vote to accept the plan.
Only those holders of claims or interests who actually vote count in these
tabulations.

In addition to this voting requirement, Section 1129 of the Bankruptcy
Code requires that a plan be accepted by each holder of a claim or interest in
an impaired class or that the plan otherwise be found by the bankruptcy court to
be in the best interests of each holder of a claim or interest in such class. In
addition, each impaired class must accept the plan for the plan to be confirmed
without application of the "fair and equitable" and "unfair discrimination"
tests in Section 1129(b) of the Bankruptcy Code discussed below.

Any Holder of an Impaired Claim or Interest is entitled to accept or
reject the Plan (unless such claim or Interest has been disallowed by the
Bankruptcy Court for purposes of accepting or rejecting the Plan). The Voting
Record Date for determining which Holders of Interests in Classes A9, A16 and
A18 are entitled to accept or reject the Plan is __________ ___, 2000, which is
the date that the order approving this Disclosure Statement was entered.

B. CONFIRMATION HEARING

The Bankruptcy Code requires the Bankruptcy Court, after notice, to
hold a hearing on the Confirmation of the Plan. The Confirmation Hearing has
been scheduled for __:__ __, Eastern Standard Time, on _________ __, 2000. The
Confirmation Hearing may be adjourned from time to time by the Bankruptcy Court
without further notice other than an announcement of the adjourned date made at
the Confirmation Hearing. Any objection to Confirmation of the Plan must be made
in writing and filed with the Bankruptcy Court and served upon the following on
or before __:__ __,Eastern Standard Time, on _______ ___, 2000:

VENABLE, BAETJER AND HOWARD, LLP AKIN, GUMP, STRAUSS, HAUER
Richard L. Wasserman & FELD, L.L.P.
1800 Mercantile Bank and Trust Building Stanley J. Samorajczyk, P.C.
Two Hopkins Plaza Michael S. Stamer
Baltimore, Maryland 21201 1333 New Hampshire Avenue, N.W.
(410) 244-7400 Washington, D.C. 20036
(202) 887-4000

Co-Counsel to CRIIMI MAE Inc.
and CRIIMI MAE Holdings II, L.P.

SHULMAN, ROGERS, GANDAL, PORDY COVINGTON & BURLING
& ECKER, P.A. Michael St. Patrick Baxter
Morton A. Faller Dennis B. Auerbach
11921 Rockville Pike 1201 Pennsylvania Avenue, NW
Third Floor Washington, D.C. 20044
Rockville, MD 20852-2753 (202) 662-6000
(301) 231-0928

Counsel to CRIIMI MAE Management, Inc. Counsel to the Official Committee of
Equity Security Holders
of CRIIMI MAE Inc.

C. CONFIRMATION

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At the Confirmation Hearing, the Bankruptcy Court will confirm the Plan
only if the Plan satisfies all of the requirements of Section 1129 of the
Bankruptcy Code. The requirements, in relevant part, are the following:

a) The Plan and the Debtors must comply with the applicable provisions
of the Bankruptcy Code.

b) The Plan must have been proposed in good faith and not by any means
forbidden by law.

c) Any payment made or to be made by the Debtors, or by an entity
issuing securities, or acquiring property under the Plan, for services or for
costs and expenses in, or in connection with, the Chapter 11 Cases or in
connection with the Plan and incident to the Chapter 11 Cases must have been
approved by or be subject to, the approval of the Bankruptcy Court as
reasonable.

d) The Debtors must have disclosed the identity and affiliations of any
individual proposed to serve, after the Confirmation of the Plan, as a director
or officer of the Debtors under the Plan, and the appointment to or continuance
in such office by such individual must be consistent with the interests of
creditors and equity security holders and with public policy. The Debtors must
have disclosed the identity of any "insider" (as defined in Section 101 of the
Bankruptcy Code) who will be employed or retained by Reorganized CMI, CMM and
Holdings and the nature of any compensation for such insider.

e) Any government regulatory commission with jurisdiction, after the
Confirmation Date, over the rates of the Debtors has approved any rate change
provided for in the Plan, or such rate change is expressly conditioned upon such
approval.

f) With respect to each Impaired Class of Claims or Interests, each
Holder of a Claim or Interest in such class must either accept the Plan or
receive or retain under the Plan on account of such Claim or Interest, property
of a value, as of the Effective Date that is not less than the amount that such
Holder would receive or retain if the Debtors were liquidated on the Effective
Date under chapter 7 of the Bankruptcy Code.

g) Each Class of Claims or Interests must either accept the Plan or not
be Impaired under the Plan. If this requirement is not met, the Plan may still
be confirmed pursuant to Section 1129(b) of the Bankruptcy Code.

h) Except to the extent that the Holder of a particular Claim has
agreed to a different treatment of such Claim, the Plan must provide that (i)
Administrative Expenses will be paid in full in Cash on the Effective Date, (ii)
Priority Claims will be paid in full in Cash on the Effective Date, or if the
Class of Priority Claims accepts the Plan, the Plan may provide for deferred
Cash payments, of a value, as of the Effective Date, equal to the Allowed amount
of such Priority Claims, and (iii) the Holder of a Priority Tax Claim will
receive on account of such Claim deferred Cash payments over a period not
exceeding six (6) years after the date of assessment of such Claim, of a value
as of the Effective Date, equal to the Allowed amount of such Claim.

i) If a class of Claims is Impaired under the Plan, at least one Class
of Claims that is Impaired by the Plan must accept the Plan, such acceptance to
be determined without giving effect to any acceptance of the Plan by an
"insider."

j) Confirmation of the Plan must not be likely to be followed by the
liquidation, or the need for further financial reorganization, of the Debtors or
any successor of the Debtors under the Plan.

k) All fees payable under Section 1930 of title 28, United States Code,
as determined by the Bankruptcy Court at the Confirmation Hearing, must have
been paid or the Plan must provide for the payment of all such fees on the
Effective Date.

l) The Plan provides for the continuation after the Effective Date
of payment of all retiree benefits, as that term is defined in Section 1114
of the Bankruptcy Code, and at the level established pursuant to Section

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1114, at any time prior to the Confirmation Date, for the duration of the
period the Debtors have obligated themselves to provide such benefits.

The Debtors believe that the Plan satisfies all of the statutory
requirements of chapter 11 of the Bankruptcy Code. Certain of these requirements
are discussed in greater detail below.

BEST INTERESTS TEST

In order to the meet the "best interests" test of Section 1129(a)(7) of
the Bankruptcy Code, the Debtors must establish that each holder of a Claim or
Interest in an Impaired class either (i) has accepted the Plan or (ii) will
receive or retain under the Plan in respect of its Claim or Interest, property
of a value, as of the Effective Date, that is not less than the amount such
holder would receive or retain if the Debtors were liquidated under chapter 7 of
the Bankruptcy Code.

To determine the recovery that Creditors and Holders of Interests would
receive if the Debtors were to be liquidated, the Bankruptcy Court must
determine the amount of cash that would be generated from the liquidation of the
assets and properties of the Debtors in a chapter 7 liquidation case. The dollar
amount that would be available for satisfaction of Claims and Interests would
consist of the proceeds resulting from the disposition of the assets of the
Debtors in a liquidation case plus the cash held by the Debtors at the time of
the commencement of the liquidation case and any interest earned on the
investment thereof minus the costs and expenses of the liquidation and any
additional administrative and priority claims that may result from the
termination of the Debtors' business and the completion of its liquidation under
chapter 7.

The Debtors' costs of liquidation under chapter 7 of the Bankruptcy
Code would include the fees payable to a trustee (or trustees) in bankruptcy and
to any additional attorneys and other professionals engaged by such trustee (or
trustees), operating costs to effectuate the liquidation of the Debtors' assets
plus any unpaid expenses incurred by the Debtors during the Chapter 11 Cases
including compensation to and reimbursement of expenses of, attorneys, financial
advisors and accountants and costs and expenses of members of the Committees
that are allowed. The foregoing types of Claims and such other Claims as may
arise in the liquidation case or result from the Chapter 11 Cases would be paid
in full from the liquidation proceeds before the balance of those proceeds would
be available to pay Unsecured Claims. In addition, additional Claims would arise
by reason of the rejection of unexpired leases and executory contracts.

Under the "best interest" test, all entities holding Unsecured Claims
in a particular class having the same rights upon liquidation would be treated
as a single class for purposes of determining the potential distribution of the
proceeds from the liquidation of the assets of the Debtors under chapter 7. The
distributions payable to each of the creditors in a Class from the liquidation
proceeds would be calculated pro rata according to the amount of the Claim in
such Class held by each Creditor. The Debtors believe that the most likely
outcome of liquidation proceeding under chapter 7 would be the application of
the rule of absolute priority of distributions. Under this rule, (i) no holders
of Unsecured Claims would receive any distribution until all holders of
Administrative Expenses, Priority Claims and Priority Tax Claims were paid in
full with interest and (ii) no holder of an Interest would receive any
distribution until all Holders of General Unsecured Claims were paid in full
with interest.

The Debtors have carefully considered the probable effects of
liquidation under chapter 7 of the Bankruptcy Code on the ultimate proceeds
available for distribution to creditors and holders of Interests, including the
following:

a) the probable costs and expenses of such liquidation;

b) the possible adverse effect of liquidation under chapter 7 on
the realizable values of the Debtors' assets and properties;

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c) the possible adverse effect of liquidation under chapter 7 on the
salability of the Debtors' business on a going-concern basis as a result of the
possible loss of key employees, the goodwill of customers, vendors and suppliers
and the negative effect on the Debtors' reputation; and

d) the possible substantial increase in Claims which would rank prior
to or on a parity with those of unsecured creditors. After considering these
factors, among others, the Debtors have prepared a liquidation analysis under
two scenarios, the "Controlled Liquidation Analysis" and the "Accelerated
Liquidation Analysis" or together referred to as the "the Liquidation Analysis"
(set forth in Exhibit C attached hereto), of the projected proceeds of a
hypothetical chapter 7 liquidation and the resulting distributions of such
proceeds to the various Classes of Claims and Holders of Interests. The
Liquidation Analysis demonstrates that the value of the distributions to each
Class of Claims and Interests pursuant to the Plan is equal to or greater than
the value of the distributions to such Class in a chapter 7 liquidation.

Although the Liquidation Analysis assumes that full distributions to
creditors of the liquidation proceeds would occur within twelve months of the
commencement of the hypothetical chapter 7 case, the Debtors also believe that
distributions of the proceeds of the liquidation could be delayed for a
significantly greater period, because of the time necessary to complete the
liquidation, the possibility of litigation among the Holders of various Classes
of Claims of Interests and the additional time required thereafter to litigate
and resolve Disputed Claims and prepare for distributions. If such further delay
were to occur, the present value of future distributions to creditors under
chapter 7 would be further reduced.

FEASIBILITY

In order to meet the "feasibility" test under Section 1129(a)(11) of
the Bankruptcy Code, the Debtors must establish that Confirmation of the Plan is
not likely to be followed by the liquidation, or the need for further financial
reorganization, of the Debtors. To determine whether the Plan meets this
requirement, the Debtor has prepared projected financial statements for
Reorganized CMI, CMM and Holdings through fiscal year ____ . See Exhibit B.

In preparing the Projections, the Debtors have assumed for clarity of
presentation that the Plan will be confirmed by the Bankruptcy Court and that
the Effective Date will occur on or before _________, 2000; however, the Debtors
believe that its operating results will not vary materially from the Projections
as a result of the Effective Date occurring earlier or later than _________,
2000.

Although the Projections are based upon the Debtors' best estimates, no
representations are made with respect to the accuracy thereof or the ability of
Reorganized CMI, CMM and Holdings to achieve the Projections. The Projections
are based upon a number of assumptions, many of which are subject to substantial
uncertainty. Some assumptions inevitably will not materialize and unanticipated
events and circumstances occurring subsequent to the date of preparation of the
Projections may affect actual results. Therefore, actual operating results may
vary materially from the projected operating results set forth in the
Projections.

Based upon the Projections, the Debtors and the CMI Equity Committee
believe the Plan is feasible and will be prepared to so demonstrate at the
Confirmation Hearing.

Each party in interest is urged to carefully examine the Projections
and the related assumptions in evaluating the feasibility of the Plan.

CONFIRMATION OVER A DISSENTING CLASS

The Bankruptcy Code contains provisions authorizing the confirmation of
a plan even if it is not accepted by all impaired classes, as long as at least
one impaired class of claims (without including any acceptance of the plan by an
insider) has accepted it. These so-called "cramdown" provisions are set forth in
Section 1129(b) of the Bankruptcy Code. As indicated above, a plan may be
confirmed under the cramdown provisions if, in addition to

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satisfying the other requirements of Section 1129 of the Bankruptcy Code, it (i)
is "fair and equitable" and (ii) "does not discriminate unfairly" with respect
to each class of claims or interests that is impaired under, and has not
accepted, the plan. The "fair and equitable" standard, also known as the
"absolute priority rule," requires, among other things, that unless a dissenting
class of claims or a class of interests receives full compensation for its
allowed claims or allowed interests, no holder of claims or interests in any
junior class may receive or retain any property on account of such claims. The
Bankruptcy Code establishes different "fair and equitable" tests for secured
creditors, unsecured creditors and equity holders, as follows:

Secured Creditors: either (i) each impaired secured creditor retains
its liens securing its secured claim and receives on account of its secured
claim deferred cash payments having a present value equal to the amount of its
allowed secured claim, (ii) each impaired secured creditor realizes the
"indubitable equivalent" of its allowed secured claim, or (iii) the property
securing the claim is sold free and clear of liens with such liens to attach to
the proceeds, and the liens against such proceeds are treated in accordance with
clause (i) or (ii) of this paragraph.

Unsecured Creditors: either (i) each impaired unsecured creditor
receives or retains under the plan of reorganization property of a value equal
to the amount of its allowed claim, or (ii) the holders of claims and equity
interests that are junior to the claims of the nonaccepting class do not receive
any property under the plan of reorganization on account of such claims and
equity interests.

Equity Holders: either (i) each equity holder will receive or retain
under the plan of reorganization property of a value equal to the greater of (a)
the fixed liquidation preference or redemption price, if any, of such stock or
(b) the value of the stock, or (ii) the holders of interests that are junior to
the nonaccepting class will not receive any property under the plan of
reorganization.

The "fair and equitable" standard has also been interpreted to prohibit
any class senior to a dissenting class from receiving under a plan more than
100% of its allowed claims. The requirement that a plan not "discriminate
unfairly" means, among other things, that a dissenting class must be treated
substantially equally with respect to other classes of equal rank.

The Debtors and the CMI Equity Committee believe that, if necessary,
the Plan may be crammed down over the dissent of Classes of certain Claims and
Interests, in view of the treatment proposed for such Classes. See "THE PLAN OF
REORGANIZATION -- Treatment of Claims and Interests Under the Plan" for
information concerning the treatment of various Classes depending on which
Classes vote to accept or reject the Plan. If necessary and appropriate, the
Debtors and the CMI Equity Committee intend to amend the Plan to permit cramdown
of dissenting Classes of Claims or Interests. There can be no assurance,
however, that the requirements of Section 1129(b) of the Bankruptcy Code would
be satisfied even if the Plan treatment provisions were amended or withdrawn as
to one or more Classes.

In addition, the Debtors and the CMI Equity Committee do not believe
that the Plan unfairly discriminates against any Class that may not accept or
otherwise consent to the Plan. A plan of reorganization "does not discriminate
unfairly" if (i) the legal rights of a nonaccepting class are treated in a
manner that is consistent with the treatment of other classes whose legal rights
are similarly situated to those of the nonaccepting class, and (ii) no class
receives payments in excess of that which it is legally entitled to receive for
its claims or equity interests. The Debtors and the CMI Equity Committee believe
the Plan does not discriminate unfairly.

THE DEBTORS AND THE CMI EQUITY COMMITTEE RESERVE THE ABSOLUTE RIGHT TO
SEEK CONFIRMATION OF THE PLAN UNDER SECTION 1129(b) OF THE BANKRUPTCY CODE IN
THE EVENT THE PLAN IS NOT ACCEPTED BY ALL IMPAIRED CLASSES.

Subject to the conditions set forth in the Plan, a determination by the
Bankruptcy Court that the Plan is not confirmable, pursuant to Section 1129 of
the Bankruptcy Code, will not limit or affect the Debtors' ability to modify the
Plan to satisfy the Confirmation requirements of Section 1129 of the Bankruptcy
Code.

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D. CONSUMMATION

If the Plan is confirmed, the Plan will be consummated and
distributions will be made on or shortly after the Effective Date, except as
otherwise provided in the Plan.

E. CONDITIONS TO EFFECTIVE DATE

The Effective Date will not occur and the Plan will not be consummated
unless and until each of the following conditions has been satisfied or waived
by the Debtors and the CMI Equity Committee:

1. The Confirmation Order in form and substance satisfactory to the
Debtors and the CMI Equity Committee and entered by the Bankruptcy Court shall
not have been modified in any respect.

2. The Recapitalization Financing shall be funded in accordance with
the Plan and the respective governing documents for each component of the
Recapitalization Financing, and the sale of the CMBS Sale Portfolio shall have
been completed.

3. All other actions and documents necessary to implement the
transactions contemplated to be effected under this Plan on or before the
Effective Date shall have been effected or executed or, if waivable, waived by
the Person entitled to the benefit thereof.

VII. CERTAIN RISK FACTORS

The risk factors enumerated below (other than those described in
"--Risks Relating to the Necessary Recapitalization Financing" and "-- Certain
Risks of Non-Confirmation"), generally assume the confirmation and consummation
of the Plan and all transactions contemplated thereby, and, except as indicated,
do not generally include matters that could prevent or delay confirmation. See
"THE PLAN OF REORGANIZATION -- Treatment of Claims and Interests Under the Plan
- -- Conditions Precedent to Confirmation and Consummation of the Plan" and
"--Voting and Confirmation of the Plan" for a discussion of such matters. Prior
to deciding whether and how to vote on the Plan, each Holder of a Claim or
Interest in a solicited Class should carefully consider all of the information
contained in this Disclosure Statement, especially the factors mentioned in the
following paragraphs.

SUBSTANTIAL INDEBTEDNESS; LEVERAGE

The Company is now highly leveraged and will continue to be highly
leveraged after giving effect to the reorganization. At September 30, 1999, the
Company had total consolidated indebtedness of $2.1 billion (of which $951
million was recourse debt to the Company (i.e., not match-funded)) and
stockholders' equity of $259 million. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "Business -- General" and the
Consolidated Financial Statements of the Company and the accompanying notes
thereto appearing elsewhere in this Disclosure Statement. After giving effect to
the reorganization, the Company's estimated pro forma aggregate indebtedness at
September 30, 1999 would total approximately $____ billion (of which
approximately $____ million would be recourse debt to the Company (i.e., not
match-funded) and stockholders' equity would be approximately $____ million. See
"BUSINESS PLAN" and "Exhibit B-Unaudited Pro Forma Consolidated Financial
Statements and Projected Financial Information."

The Company's management believes that, based on its projections (which
are based upon a number of assumptions), the Company will have sufficient cash
resources to pay interest and scheduled principal on its outstanding
indebtedness, after giving effect to the reorganization. See "Exhibit
B-Unaudited Pro Forma Consolidated Financial Statements and Projected Financial
Information." However, even if the reorganization is completed, the Company's
ability to meet its debt service obligations will depend on a number of factors,
including management's ability to maintain cash flow and to generate capital
internally through non-cash taxable dividends consistent with the terms agreed
to with Merrill and GACC as set forth in the Plan. There can be no assurance
that targeted levels of cash flow will actually be achieved, that non-cash
taxable dividends will satisfy the Company's

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taxable distribution requirements, or that new capital will be available to the
Company. The Company's ability to maintain or increase cash flow and access new
capital with, respect to the resumption of Subordinated CMBS acquisitions and
commercial mortgage loan originations and securitizations, will depend upon,
among other things, interest rates, prevailing economic conditions and other
factors, many of which are beyond the control of the Company.

The Company's high level of debt limits its ability to obtain
additional financing, reduces income available for distributions, restricts the
Company's ability to react quickly to changes in its business and makes the
Company more vulnerable to economic downturns. In addition, the agreements
governing the Reorganized Debtors' debt may impose significant operating and
financial restrictions on the Company. See "THE PLAN OF REORGANIZATION."

RISKS RELATING TO NECESSARY RECAPITALIZATION FINANCING

Consummation of the Plan is conditioned upon, among other matters, the
Company obtaining New Debt and completing the CMBS Sale. See "PLAN OF
REORGANIZATION." Although the Company is engaged in negotiating commitments for
the CMBS Sale and has agreed to terms with respect to a majority of the New
Debt, there can be no assurance that the Company will complete the CMBS Sale or
obtain and satisfy all terms and conditions of the New Debt.

RISKS RELATING TO THE PROJECTIONS

The management of the Company has prepared the projected financial
information contained in this Disclosure Statement relating to the Company (the
"Projections") in connection with the development of the Plan and in order to
present the anticipated effects of the Plan and the transactions contemplated
thereby. The Projections assume the Plan and the transactions contemplated
thereby will be implemented in accordance with their terms and represent
management's best estimate of the results of the Company's operations following
the Effective Date. The assumptions and estimates underlying such Projections
are forward-looking and, as such, are inherently uncertain and, although
considered reasonable by management as of the date hereof, are subject to
significant business, economic and competitive risks and uncertainties that
could cause actual results to differ materially from those projected, including,
among others, (1) the uncertain ability of the Company to generate sufficient
funds or, in the case of resumption of Subordinated CMBS acquisitions and
commercial mortgage loan originations and securitizations, to gain access to new
capital (through credit facilities, or otherwise) to meet its working capital,
debt service, capital expenditure and refinancing needs; (2) interest rate and
financial market volatility; (3) the ability of the Company to retain an
adequate number and mix of employees; and (4) adverse economic conditions and
competition. Accordingly, the Projections are not necessarily indicative of the
future financial condition or results of operations of the Company.
Consequently, the projected financial information contained herein should not be
regarded as a representation by the Company, the Company's advisors or any other
person that the Projections will necessarily be achieved. The Company does not
intend to update or revise the Projections. See "Exhibit B-Unaudited Pro Forma
Consolidated Financial Statements and Projected Financial Information" and "THE
PLAN OF REORGANIZATION -- The Reorganized Debtors-- Projected Financial
Information."

RISKS OF LOSS OF REIT STATUS

It is anticipated that the Company will continue to operate in such a
manner as to qualify as a REIT for federal income tax purposes. If the Company
were to fail to qualify as a REIT in any taxable year, it would be subject to
federal income tax (including any applicable alternative minimum tax) on its
taxable income at regular corporate rates, and distributions to stockholders
would not be deductible by the Company in computing its taxable income. Any such
corporate tax liability could be substantial and would reduce the amount of cash
available for distribution to stockholders, which in turn could have an adverse
impact on the value of, and trading prices for, the Common Stock. Unless
entitled to relief under certain Code provisions, the Company also would be
disqualified from taxation as a REIT for the four taxable years following the
year during which the Company ceased to qualify as a REIT.

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The Company must distribute at least 95% of its net taxable income each
year (excluding any net capital gain and certain non-cash income) in order to
maintain its status as a REIT for federal income tax purposes (the "95%
Distribution Requirement"). As a REIT, the Company is also subject to a 4%
non-deductible excise tax on the amount, if any, by which certain distributions
paid by it with respect to any calendar year are less than the sum of (i) 85% of
its ordinary income for that year, (ii) 95% of its capital gain net income for
that year, and (iii) 100% of its undistributed taxable income from prior years.

The Company intends to make distributions to its stockholders to comply
with the 95% Distribution Requirement. It is anticipated that, for the
foreseeable future, a substantial portion of the Company's distributions to meet
its tax distribution requirements will be in the form of non-cash taxable
dividends. To the extent such distributions are paid in cash, differences in
timing between the recognition of taxable income and the actual receipt of cash
could require the Company to borrow funds or sell assets on a short-term basis
to satisfy the 95% Distribution Requirement or to avoid the non-deductible
excise tax. There can be no assurance that the Company would be able to borrow
funds or sell assets on a timely basis. The requirement to distribute a
substantial portion of the Company's net taxable income could cause the Company
(i) to sell assets in adverse market conditions, (ii) to distribute amounts that
represent a return of capital, (iii) to distribute amounts that would otherwise
be spent on future investments or repayment of debt, or (iv) to distribute
non-cash dividends in lieu of cash. There can be no assurance that non-cash
taxable dividends will satisfy the Company's taxable distribution requirements
to maintain its status as a REIT.

See "Business-Effect of Chapter 11 Filing on REIT Status and Other Tax
Matters" for a discussion of further risks of loss of REIT status, the
distribution of non-cash taxable dividends with respect to the Company's 1998
taxable income and distributions with respect to the Company's 1999 taxable
income.

TAXABLE MORTGAGE POOL RISKS

An entity that constitutes a "taxable mortgage pool" as defined in the
Tax Code ("TMP") is treated as a separate corporate level taxpayer for federal
income tax purposes. In general, for an entity to be treated as a TMP (i)
substantially all of the assets must consist of debt obligations and a majority
of those debt obligations must consist of mortgages; (ii) the entity must have
more than one class of debt securities outstanding with separate maturities and
(iii) the payments on the debt securities must bear a relationship to the
payments received from the mortgages. The Company currently owns all of the
equity interests in three trusts that constitute TMPs (CBO-1, CBO-2 and CMO-IV,
collectively the "Trusts"). See Notes 5 and 6 to Notes to Consolidated Financial
Statements for descriptions of CBO-1, CBO-2 and CMO-IV. The statutory provisions
and regulations governing the tax treatment of TMPs (the "TMP Rules") provide an
exemption for TMPs that constitute "qualified REIT subsidiaries" (that is,
entities whose equity interests are wholly owned by a REIT). As a result of this
exemption and the fact that the Company owns all of the equity interests in each
Trust, the Trusts currently are not required to pay a separate corporate level
tax on income they derive from their underlying mortgage assets.

The Company also owns certain securities structured as bonds (the
"Bonds") issued by each of the Trusts. Certain of the Bonds owned by the Company
serve as collateral (the "Pledged Bonds") for short-term, variable-rate
borrowings used by the Company to finance their initial purchase. If the
creditors holding the Pledged Bonds were to seize or sell this collateral and
the Pledged Bonds were deemed to constitute equity interests (rather than debt)
in the Trusts, then the Trusts would no longer qualify for the exemption under
the TMP Rules provided for qualified REIT subsidiaries. The Trusts would then be
required to pay a corporate level federal income tax. As a result, available
funds from the underlying mortgage assets that would ordinarily be used by the
Trusts to make payments on certain securities issued by the Trust (including the
equity interests and the Pledged Bonds) would instead be applied to tax
payments. Since the equity interests and Bonds owned by the Company are the most
subordinated securities and, therefore, would absorb payment shortfalls first,
the loss of the exemption under the TMP rules could have a material adverse
effect on their value and the payments received thereon.

In addition to causing the loss of the exemption under the TMP Rules, a
seizure or sale of the Pledged Bonds and a characterization of them as equity
for tax purposes could also jeopardize the Company's REIT status if

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the value of the remaining ownership interests in any Trust held by the Company
(i) exceeded 5% of the total value of the Company's assets or (ii) constituted
more than 10% of the Trust's voting interests.

PHANTOM INCOME MAY RESULT IN ADDITIONAL TAX LIABILITY

The Company's investment in Subordinated CMBS and certain other types
of mortgage related assets may cause it, under certain circumstances, to
recognize taxable income in excess of its economic income ("phantom income") and
to experience an offsetting excess of economic income over its taxable income in
later years. As a result, stockholders, from time to time, may be required to
treat distributions that economically represent a return of capital, as taxable
dividends. Such distributions would be offset in later years by distributions
representing economic income that would be treated as returns of capital for
federal income tax purposes. Accordingly, if the Company recognizes phantom
income, its stockholders may be required to pay federal income tax with respect
to such income on an accelerated basis (i.e., before such income is realized by
the stockholders in an economic sense). Taking into account the time value of
money, such an acceleration of federal income tax liabilities would cause
stockholders to receive an after-tax rate of return on an investment in the
Company that would be less than the after-tax rate of return on an investment
with an identical before-tax rate of return that did not generate phantom
income. As the ratio of the Company's phantom income to its total income
increases, the after-tax rate of return received by a taxable stockholder of the
Company will decrease.

EFFECT OF RATE COMPRESSION ON MARKET PRICE OF STOCK

The Company's actual earnings performance as well as the market's
perception of the Company's ability to achieve earnings growth may affect the
market price of the Common Stock. In the Company's case, the level of earnings
(or losses) depends to a significant extent upon the width and direction of the
spread between the net yield received by the Company on its income earning
assets (principally, the long term fixed rate assets comprising its CMBS
portfolio) and its floating rate cost of borrowing. In periods of narrowing or
compressing spreads, the resulting pressure on the Company's earnings may
adversely affect the market value of its Common Stock. Spread compression can
occur in high or low interest rate environments and typically results when net
yield on the long term assets adjusts less frequently than the current rate on
debt used to finance their purchase. For example, if the Company relies on short
term, floating rate borrowings to finance the purchase of long term fixed rate
CMBS assets, the Company may experience rate compression, and a resulting
diminution of earnings, if the interest rate on the debt increases while the
coupon and yield measure for the financed CMBS remains constant. In such an
event, the market price of the Common Stock may decline to reflect the perceived
decrease in value of the Company resulting from the spread compression. In an
effort to mitigate this risk, the Company as a matter of policy generally hedges
at least 75% of its variable rate debt with interest rate protection agreements.

CERTAIN RISKS OF NON-CONFIRMATION

Even if the requisite acceptances are received, there can be no
assurance that the Bankruptcy Court will confirm the Plan. The Bankruptcy Court
could decline to confirm the Plan if it were to find that any of the statutory
conditions to confirmation had not been met. Section 1129 of the Bankruptcy Code
sets forth the requirements for confirmation and requires, among other things, a
finding by the Bankruptcy Court that the confirmation of the Plan is not likely
to be followed by a liquidation or a need for further financial reorganization
and that the value of distributions to non-accepting Holders of Claims and
Interests will not be less than the value of distributions such Holders of
Claims and Interests would receive if the Company were liquidated under chapter
7 of the Bankruptcy Code. While there can be no assurance that the Bankruptcy
Court will conclude that these requirements have been met, the Company believes
that the Plan will not be followed by a need for further financial
reorganization and that non-accepting Holders of Claims and Interests will
receive distributions at least as great as would be received in a liquidation
pursuant to chapter 7 of the Bankruptcy Code. See "THE PLAN OF REORGANIZATION
- --Chapter 7 Liquidation Analysis" and "Exhibit C Liquidation Analysis."

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The confirmation and consummation of the Plan also are subject to
certain other conditions. See "THE PLAN OF REORGANIZATION--Treatment of Claims
and Interests Under the Plan--Conditions Precedent to Confirmation and
Consummation of the Plan."

If the Plan, or a plan determined not to require resolicitation of any
Classes by the Bankruptcy Court, were not to be confirmed, it is unclear whether
a reorganization could be implemented and what Holders of Claims and Interests
would ultimately receive with respect to their Claims and Interests. If an
alternative reorganization could not be agreed to, it is possible that CRIIMI
MAE would have to liquidate its assets, in which case it is likely that Holders
of Claims and Interests would receive less than they would have received
pursuant to the Plan. See "THE PLAN OF REORGANIZATION--Chapter 7 Liquidation
Analysis" and "Exhibit C Liquidation Analysis."

NONCOMPARABILITY OF HISTORICAL FINANCIAL INFORMATION

As a result of the consummation of the Plan and the transactions
contemplated thereby, the financial condition and results of operations of the
Company from and after the Effective Date may not be comparable to the financial
condition or results of operations reflected in the historical financial
statements of the Company set forth elsewhere herein.

RISKS OF OWNING SUBORDINATED CMBS

As an owner of the most subordinate tranches of CMBS, the Company will
be the first to bear any loss and the last to have a priority right to the cash
flow of the related mortgage pool. For example, if the Company owns a $10
million subordinated interest in an issuance of CMBS consisting of $100 million
of mortgage loan collateral, a 7% loss on the underlying mortgage loans will
result in a 70% loss on the subordinated interest.

The Company's Subordinated CMBS can change in value due to a number of
economic factors. These factors include changes in the underlying real estate,
fluctuations in Treasury rates, and supply/demand mismatches which are reflected
in CMBS pricing spreads. For instance, changes in the credit quality of the
properties securing the underlying mortgage loans can result in interest payment
shortfalls, to the extent there are mortgage payment delinquencies, and
principal losses, to the extent that there are payment defaults and the amounts
are not fully recovered. These losses may result in a permanent decline in the
value of the CMBS, and the losses may change the Company's anticipated yield to
maturity if the losses are in excess of those previously estimated. CMBS are
priced at a spread above the current Treasury security with a maturity that most
closely matches the CMBS' weighted average life. The value of CMBS can be
affected by changes in Treasury rates, as well as changes in the spread between
such CMBS and the Treasury security with a comparable maturity. For example, the
spread to Treasury of a CMBS may have increased from 400 basis points to 500
basis points. If the Treasury security with a comparable maturity had a constant
yield of 5% then, in this example, the yield on the CMBS would have changed from
9% to 10% and accordingly, the value of such CMBS would have declined.
Generally, increases and decreases in both Treasury rates or spreads will result
in temporary changes in the value of the Subordinated CMBS assuming that the
Company has the ability and intent to hold its CMBS investments until their
maturity. However, such temporary changes in the value of Subordinated CMBS
become permanent changes realized through the income statement when the Company
no longer intends or fails to have the ability to hold such Subordinated CMBS to
maturity. The Company has historically been unable to obtain financing at the
time of acquisition that matches the maturity of the related investments,
resulting in a periodic need to obtain short-term financing secured by the
Company's CMBS. The inability to refinance this short-term floating-rate
financing with long-term fixed-rate financing or a decline in the value of the
collateral securing such short-term floating-rate indebtedness could result in a
situation where the Company is required to sell CMBS or provide additional
collateral, which could have and has had an adverse effect on the Company and
its financial position and results of operations. The Company's ability to
borrow amounts in the future may be impacted by, among other things, the credit
performance of the underlying pools of commercial mortgage loans, and other
factors affecting the Subordinated CMBS that it owns.

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LIMITED PROTECTION FROM HEDGING TRANSACTIONS

To minimize the risk of interest rate changes on interest expense as it
relates to its short-term, variable-rate debt, the Company follows a policy to
hedge at least 75% of its variable-rate debt with interest rate protection
agreements in order to provide a ceiling on the amount of interest expense
payable by the Company. As of September 30, 1999, 91% of the Company's
outstanding variable-rate debt was hedged with interest rate protection
agreements that partially limit the impact of rising interest rates above a
certain defined threshold, or strike price. When these interest rate protection
agreements expire, the Company will have increased interest rate risk unless it
is able to enter into replacement interest rate protection agreements. As of
September 30, 1999, the weighted average remaining term for the interest rate
protection agreements was approximately 1.3 years with a weighted average strike
price of 6.7%. There can be no assurance that the Company will be able to
maintain interest rate protection agreements to meet its 75% hedge policy on
satisfactory terms or to adequately protect against rising interest rates on the
Company's debt. In addition, the Company does not currently hedge against all
interest rate risks, including increases in interest rate spreads and increases
in Treasury rates, which adversely affect the value of its CMBS. Moreover,
hedging involves risk and typically involves costs, including transaction costs.
Such costs increase dramatically as the period covered by the hedging increases
and during periods of rising and volatile interest rates. The Company may
increase its hedging activity and, thus, increase its hedging costs, during such
periods when interest rates are volatile or rising and hedging costs have
increased.

LIMITED LIQUIDITY OF SUBORDINATED CMBS MARKET

There is currently no active secondary trading market for Subordinated
CMBS. This limited liquidity results in uncertainty in the valuation of the
Company's portfolio of Subordinated CMBS. In addition, even if the market for
Subordinated CMBS fully recovers, the liquidity of such market has historically
been limited; and furthermore, during adverse market conditions the liquidity of
such market has been severely limited, which would impair the amount the Company
could realize if it were required to sell a portion of its Subordinated CMBS.

PENDING LITIGATION

Both before and during the pendency of the Debtors' chapter 11 cases,
the Company and certain of its officers and directors have been involved in
various litigation, including Securities Claims. See "GENERAL INFORMATION
- --Legal Proceedings" for more detailed descriptions of the foregoing and other
legal proceedings.

INVESTMENT COMPANY ACT RISK

Under the Investment Company Act of 1940, as amended (the "Investment
Company Act"), an investment company is required to register with the SEC and is
subject to extensive restrictive and potentially adverse regulation relating to,
among other things, operating methods, management, capital structure, dividends
and transactions with affiliates. However, as described below, companies that
are primarily engaged in the business of acquiring mortgages and other liens on
and interests in real estate ("Qualifying Interests") are excluded from the
requirements of the Investment Company Act.

To qualify for the Investment Company Act exclusion, CRIIMI MAE, among
other things, must maintain at least 55% of its assets in Qualifying Interests
(the "55% Requirement") and is also required to maintain an additional 25% in
Qualifying Interests or other real estate-related assets ("Other Real Estate
Interests" and such requirement, the "25% Requirement"). According to current
SEC staff interpretations, CRIIMI MAE believes that its government insured
mortgage securities and originated loans constitute Qualifying Interests. In
accordance with current SEC staff interpretations, the Company believes that all
of its Subordinated CMBS constitute Other Real Estate Interests and that certain
of its Subordinated CMBS also constitute Qualifying Interests. On certain of the
Company's Subordinated CMBS, the Company, along with other rights, has the
unilateral right to direct foreclosure with respect to the underlying mortgage
loans. Based on such rights and its economic interest in the underlying mortgage
loans, the Company believes that the related Subordinated CMBS constitute
Qualifying Interests. As of

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September 30, 1999, the Company believes that it was in compliance with both the
55% Requirement and the 25% Requirement.

If the SEC or its staff were to take a different position with respect
to whether such Subordinated CMBS constitute Qualifying Interests, the Company
could, among other things, be required either (i) to change the manner in which
it conducts its operations to avoid being required to register as an investment
company or (ii) to register as an investment company, either of which could have
a material adverse effect on the Company. If the Company were required to change
the manner in which it conducts its business, it would likely have to dispose of
a significant portion of its Subordinated CMBS or acquire significant additional
assets that are Qualifying Interests. Alternatively, if the Company were
required to register as an investment company, it expects that its operating
expenses would significantly increase and that the Company would have to reduce
significantly its indebtedness, which could also require it to sell a
significant portion of its assets. No assurances can be given that any such
dispositions or acquisitions of assets, or deleveraging, could be accomplished
on favorable terms.

Further, if the Company were deemed an unregistered investment company,
the Company could be subject to monetary penalties and injunctive relief. The
Company would be unable to enforce contracts with third parties and third
parties could seek to obtain rescission of transactions undertaken during the
period the Company was deemed an unregistered investment company.

EFFECT OF ECONOMIC RECESSION ON LOSSES AND DEFAULTS

Economic recession may increase the risk of default on commercial
mortgage loans and correspondingly increase the risk of losses on the
Subordinated CMBS backed by such loans. Economic recession may also cause
reduced demand for commercial mortgage loans. This in turn may cause declining
values of commercial real estate securing the outstanding mortgage loans,
weakening collateral coverage and increasing the possibility of losses in the
event of a default.

ASSUMPTION REGARDING BUSINESS OF THE COMPANY AND RESUMPTION OF BUSINESS
ACTIVITIES

For the purpose of the Plan and this Disclosure Statement and the
information contained therein and herein including, but not limited to, the
projected financial information, the Company has defined its business
principally as owning and managing mortgage-related assets, and, prior to the
Chapter 11 filing, acquiring Subordinated CMBS and mortgage originations and
securitizations. Although it is anticipated that the Company will resume
Subordinated CMBS acquisitions and its mortgage origination and securitization
programs at some time in the future based on the Company's ability to access
capital, prevailing industry conditions and the general business climate, there
can be no assurance of such resumption. All decisions concerning resumption of
business activities will be made by the Board of Directors of the Company, as
determined to be in the best interests of the Company. Consequently, there can
be no certainty as to the business decisions that will be made by the Board of
Directors of the Company. Failure to resume Subordinated CMBS acquisitions,
mortgage originations and/or securitizations could adversely impact the
Company's results of operations.

The Company's ability to access additional capital will be affected by
a number of factors, many of which are not in the Company's control. These
include the cost and availability of such capital, changes in interest rates and
interest rate spreads, changes in the commercial mortgage industry and the
commercial real estate market, general economic conditions, perceptions in the
capital markets of the Company's business, covenants under the Company's debt
securities and credit facilities, results of operations, leverage, financial
condition and business prospects.

RESULTS OF OPERATIONS ADVERSELY AFFECTED BY FACTORS BEYOND COMPANY'S CONTROL

The Company's results of operations can be adversely affected by
various factors, many of which are beyond the control of the Company, and will
depend on, among other things, the level of net interest income generated by,
and the market value of, the Company's CMBS portfolio. The Company's net
interest income and

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results of operations will vary primarily as a result of fluctuations in
interest rates, CMBS pricing, and borrowing costs. The Company's results of
operations also will depend upon the Company's ability to protect against the
adverse effects of such fluctuations as well as credit risks. Interest rates,
credit risks, borrowing costs and credit losses depend upon the nature and terms
of the CMBS, conditions in financial markets, the fiscal and monetary policies
of the U.S. government, international economic and financial conditions and
competition, none of which can be predicted with any certainty. Because changes
in interest rates may significantly affect the Company's CMBS and other assets,
the operating results of the Company will depend, in large part, upon the
ability of the Company to manage its interest rate and credit risks effectively
while maintaining its status as a REIT. See "-- Limited Protection from Hedging
Transactions."

BORROWING RISKS

A substantial portion of the Company's borrowings are expected to be in
the form of collateralized borrowings. The terms of the New Debt contemplated to
be provided by Merrill and GACC are set forth in the term sheet which is
attached as Exhibit 1 to the Plan. Holders of Claims and Interests should refer
to that Exhibit for a description of the terms of the Merrill and GACC New Debt.
Such Merrill and GACC New Debt will be collateralized by first priority liens
and security interests in certain assets, and will be subject to a number of
terms, conditions and restrictions which are set forth in the term sheet
including, without limitation, scheduled principal and interest payments,
accelerated principal payments, restrictions and requirements with respect to
the collection, management, use and application of funds, and certain approval
rights with respect ot Reorganized CMI's Board of Directors. Certain events,
including, without limitation, the failure to satisfy certain payment
obligations will result in further restrictions on the ability of the Company to
take certain actions including, without limitation, to pay cash dividends to
preferred or common shareholders.

A limited portion of the Company's borrowing may be in the form of
collateralized, short-term floating-rate secured borrowings. The amount borrowed
under such agreements is based on the market value of the CMBS pledged to secure
specific borrowings. Under adverse market conditions, the value of pledged CMBS
would decline, and lenders could initiate margin calls (the Company could be
required to post additional collateral or to reduce the amount borrowed to
restore the ratio of the amount of the borrowing to the value of the
collateral). The Company may be required to sell CMBS to reduce the amount
borrowed. If these sales were made at prices lower than the carrying value of
the CMBS, the Company would experience losses.

A default by the Company under its collateralized borrowings also could
result in a liquidation of the collateral. If the Company is forced to liquidate
CMBS that qualify as qualified real estate assets (under the REIT Provisions of
the Code) to repay borrowings, there can be no assurance that it will be able to
maintain compliance with the REIT Provisions of the Code regarding asset and
source of income requirements.

INVERTED YIELD CURVE ADVERSELY AFFECTS INCOME

The relationship between short-term and long-term interest rates is
often referred to as the "yield curve." Ordinarily, short-term interest rates
are lower than long-term interest rates. If short-term interest rates rise
disproportionately relative to long-term interest rates (a flattening of the
yield curve), the borrowing costs of the Company may increase more rapidly than
the interest income earned on its assets. Because borrowings will likely bear
interest at short-term rates (such as LIBOR) and CMBS will likely bear interest
at medium-term to long-term rates (such as those calculated based on the
Ten-Year U.S. Treasury Rate), a flattening of the yield curve will tend to
decrease the Company's net income, assuming the Company's short-term borrowing
rates bear a strong relationship to short-term Treasury Rates. Additionally, to
the extent cash flows from long-term assets are reinvested in other long-term
assets, the spread between the coupon rates of long-term assets and short-term
borrowing rates may decline and also may tend to decrease the net income and
mark-to-market value of the Company's net assets. It is also possible that
short-term interest rates may adjust relative to long-term interest rates such
that the level of short-term rates exceeds the level of long-term rates (a yield
curve inversion). In this case, as well as in a positively sloped yield curve
environment, borrowing costs could exceed the interest income and operating
losses would be incurred.

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FAILURE TO MANAGE MISMATCH BETWEEN LONG-TERM ASSETS AND SHORT-TERM FUNDING

The Company's operating results will depend in large part on
differences between the income from its CMBS and its borrowing costs. The
Company anticipates that at least __% of its CMBS, on a pro forma basis, will
have interest payment rates (i.e., coupon rates) which remain fixed until their
maturity. If the Company resumes the acquisition of Subordinated CMBS, the
Company intends to fund a significant portion of its CMBS with borrowings having
interest rates (i.e., borrowing rates) that reset more frequently, usually
monthly or quarterly. If interest rates rise, borrowing rates (and borrowing
costs) of the Company are expected to rise more quickly than coupon rates (and
investment income) on the Company's CMBS. This would decrease both the Company's
net income, potentially resulting in a net loss and the mark-to-market value of
the Company's net assets, and would be expected to decrease the market price of
the Company's Common Stock and to slow future acquisitions of assets. Although
the Company intends to invest primarily in fixed-rate CMBS, the Company also may
own adjustable rate CMBS. The coupon rates of adjustable rate CMBS normally
fluctuate with reference to specific rate indices. The Company may fund these
adjustable rate CMBS with borrowings having borrowing rates which reset monthly
or quarterly. To the extent that there is a difference between (i) the interest
rate index used to determine the coupon rate of the adjustable rate CMBS (asset
index) and (ii) the interest rate index used to determine the borrowing rate for
the Company's related financing (borrowing index), the Company will bear a
"basis" interest rate risk. Typically, if the borrowing index rises more than
the asset index, the net income of the Company would be decreased all other
things being constant. Additionally, the Company's adjustable rate CMBS may be
subject to periodic rate adjustment limitations and periodic and lifetime rate
caps which limit the amount that the coupon rate can change during any given
period. No assurance can be given as to the amount or timing of changes in
interest rates or their effect on the Company's CMBS, their valuation or income
derived therefrom. During periods of changing interest rates, coupon rate and
borrowing rate mismatches could negatively impact the Company's net income,
distributions and the market price of the Common Stock.

COMPETITION

If the Company resumes the acquisition of Subordinated CMBS following
its reorganization, the Company would compete with mortgage REITs, specialty
finance companies, banks, hedge funds, investment banking firms, other lenders,
and other entities purchasing Subordinated CMBS. Many of the Company's
competitors for Subordinated CMBS may have greater access to capital and other
resources (or the ability to obtain capital at a lower cost) and may have other
advantages over the Company.

There can be no assurance that the Company would be able to obtain
financing at borrowing rates below the asset yields of its Subordinated CMBS. In
such event, the Company may incur losses or may be forced to further reduce the
size of its Subordinated CMBS portfolio. The Company would face competition for
financing sources which may limit the availability of, and affect the cost of,
funds to the Company.

VIII. CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion summarizes the material federal income tax consequences
expected to result from the consummation of the Plan. This discussion is based
on current provisions of the Internal Revenue Code of 1986, as amended (the "Tax
Code"), applicable Treasury Regulations, judicial authority and current
administrative rulings and pronouncements of the Internal Revenue Service (the
"Service"). There can be no assurance that the Service will not take a contrary
view, and no ruling from the Service has been or will be sought.

Legislative, judicial or administrative changes or interpretations may
be forthcoming that could alter or modify the statements and conclusions set
forth herein. Any such changes or interpretations may or may not be retroactive
and could affect the tax consequences to Holders, the Company and the
Reorganized Debtors. It cannot be predicted at this time whether any tax
legislation will be enacted or, if enacted, whether any tax law changes
contained therein would affect the tax consequences to the Holders, the Company
and the Reorganized Debtors.

The following summary is for general information only. The tax
treatment of a Holder may vary depending upon such Holder's particular
situation. This discussion assumes that Holders of Old Securities have held such
property as "capital assets" within the meaning of Section 1221 of the Tax Code
(generally, property held for

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investment). This summary does not address all of the tax consequences that may
be relevant to a Holder, nor does it address the federal income tax consequences
to Holders subject to special treatment under the federal income tax laws, such
as brokers or dealers in securities or currencies, certain securities traders,
tax-exempt entities, financial institutions, insurance companies, foreign
corporations, Holders who are not citizens or residents of the United States,
Holders that hold the Old Securities as a position in a "straddle" or as part of
a "synthetic security," "hedging," "conversion" or other integrated instrument,
Holders that have a "functional currency" other than the United States dollar
and Holders that have acquired Old Securities in connection with the performance
of services. EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF THE PLAN, INCLUDING THE APPLICABILITY AND EFFECT OF ANY
STATE, LOCAL OR FOREIGN TAX LAWS.

TAX EFFECTS TO THE DEBTORS. The Debtors generally will each realize
cancellation of indebtedness ("COI") income to the extent that the fair market
value of any property received by Holders of their indebtedness is less than the
adjusted issue price (plus the amount of any accrued but unpaid interest) of
such indebtedness discharged thereby. Under Section 108 of the Tax Code,
however, COI income will not be recognized if the COI income occurs in a case
brought under the Bankruptcy Code, provided the taxpayer is under the
jurisdiction of a court in such case and the cancellation of indebtedness is
granted by the court or is pursuant to a plan approved by the court.
Accordingly, because the cancellation of the indebtedness of the Debtors will
occur in a case brought under the Bankruptcy Code, the Debtors will each be
under the jurisdiction of the court in such case and the cancellation of the
indebtedness will be pursuant to the Plan, the Debtors should not be required to
recognize any COI income realized as a result of the implementation of the Plan.

Under Section 108(b) of the Tax Code, the Debtors will be required to
reduce certain tax attributes including certain losses, credits and
carryforwards, if any including tax basis in assets (but not below the amount of
liabilities remaining immediately after the discharge of indebtedness), in an
amount equal to the amount of COI income excluded from income as described in
the preceding paragraph (subject to certain modifications).

TAX EFFECTS TO THE HOLDERS OF CLAIMS. Pursuant to the Plan, in exchange
for their Claims, the Holders thereof will receive a portion of their Allowed
Claim in cash and/or in other property (the "Exchange"). The tax effect to the
Holder of a Claim will depend upon (a) whether the Claim is treated as a
"security" solely for federal income tax purposes, and (b) whether the non cash
property received, if any, in the Exchange is treated as a "security" solely for
federal income tax purposes. An exchange of each Holder's Claim for cash and/or
other property should be treated as a "recapitalization" and, therefore, a
reorganization within the meaning of Section 368(a) of the Tax Code if the
Holder of the Claim is treated as holding a "security" for federal income tax
purposes and receives property in the Exchange which is also treated as a
"security" for federal income tax purposes. Generally, only debt instruments
will qualify as a "security." The test as to whether a debt instrument is a
"security" involves an overall evaluation of the nature of the debt instrument,
with the term of the debt instrument usually regarded as one of the most
significant factors. Generally, debt instruments with a term of five years or
less have not qualified as "securities" whereas debt instruments with a term of
ten years or more generally have qualified as "securities." Accordingly, whether
a Claim and the property, if any, received in the Exchange constitute
"securities" and, therefore, qualify the Exchange as a recapitalization will
depend on the terms of that particular debt instrument. Each Holder of a Claim
is urged to consult with its own personal tax advisor as to the tax consequences
of the Exchange to such Holder.

To the extent a Holder's Claim and such Holder's property received
constitute "securities" for federal income tax purposes, the Exchange should be
treated as a "reorganization" for federal income tax purposes. As a result, such
exchanging Holders generally should not recognize any gain or loss (except to
the extent the cash and/or other property received are attributable to accrued
but unpaid interest on the Claim, in which event the Holder would generally be
required to treat such amounts as payment of interest includible in income in
accordance with the Holder's method of accounting for tax purposes (see "Accrued
Interest" below)). A Holder of a Claim will recognize any gain realized on the
Exchange to the extent of the cash received in the Exchange (other than any cash
received which is attributable to accrued but unpaid interest on the Claim). Any
such gain would generally be long-term capital gain (subject to the market
discount rules discussed below) if the Claim had been held for more than one
year. A Holder's adjusted tax basis in its property received will be equal to
the Holder's adjusted tax basis in its

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<PAGE>

Claim plus any gain recognized (including income attributable to accrued but
unpaid interest on the Claim), less the amount of cash received pursuant to the
Exchange. A Holder's holding period for the property received will generally
include the Holder's holding period for its Claim.

To the extent a Holder's Claim and/or such Holder's property received
do not constitute "securities" for federal income tax purposes, then an
exchanging Holder would recognize gain or loss equal to the difference between
the fair market value of the property received and the Holder's adjusted tax
basis in the Claim exchanged therefor. Any such gain or loss would generally be
long-term capital gain or loss (subject to the market discount rules discussed
below) if the Claim had been held for more than one year. In this event, a
Holder's tax basis in the property received would be equal to its fair market
value on the Effective Date, and the holding period for the property received
would begin on the day immediately after the Effective Date.

A Holder of a Claim not discussed above should generally recognize gain
or loss equal to the amount of any cash plus the fair market value of any other
property received, with respect to its Claim (other than for accrued but unpaid
interest) less its adjusted basis in its Claim (other than for accrued but
unpaid interest). The character of such gain or loss as long-term or short-term
capital gain or loss or as ordinary income or loss will be determined by a
number of factors, including the tax status of the Holder, whether the Claim
constitutes a capital asset in the hands of the Holder, whether the Claim has
been held for more than one year, whether the Claim was purchased at a discount,
and whether and to what extent the Holder had previously claimed a bad debt
deduction or a worthless security deduction.

ACCRUED INTEREST. Holders will be treated as receiving a payment of
interest (includible in income in accordance with the Holder's method of
accounting for tax purposes) to the extent that any cash or other property
received pursuant to the Plan is attributable to accrued but unpaid interest, if
any, on such Claims. The extent to which the receipt of cash or other property
should be attributable to accrued but unpaid interest is unclear. The Debtors
intend to take the position that such cash or property distributed pursuant to
the Plan will first be allocable to the principal amount of a Claim and then, to
the extent necessary, to any accrued but unpaid interest thereon. Each Holder
should consult its own tax advisor regarding the determination of the amount of
consideration received under the Plan that is attributable to interest (if any).
A Holder generally will be entitled to recognize a loss to the extent any
accrued interest was previously included in its gross income and is not paid in
full.

If any property received pursuant to the Plan is considered
attributable to accrued but unpaid interest, a Holder's basis in such property
should be equal to the amount of interest income treated as satisfied by the
receipt of such property. The holding period in such property should begin on
the day immediately after the Effective Date.

MARKET DISCOUNT. Generally, a Holder of a Claim represented by a debt
instrument who purchased its Claim at a "market discount" (i.e., at a price
below the Claim's adjusted issue price) must treat gain recognized on the
disposition of its property received as ordinary income to the extent market
discount accrued while the debt instrument was held by the Holder, unless the
Holder made an election to include such market discount in income as it accrued.

Holders of Claims should consult their own tax advisors regarding the
amount of any market discount that accrued with respect to their property
received in the Exchange.

The Code provides that "under regulations" (which have not yet been
issued), accrued market discount on a market discount bond is not recognized as
ordinary income at the time of the bond's disposition if the disposition occurs
in a "nonrecognition transaction," including a recapitalization. Instead,
accrued market discount on a market discount bond disposed of in a
nonrecognition transaction is converted into accrued market discount on property
received in the transaction if that property is a market discount bond. If the
property received is not a market discount bond, accrued market discount on the
old market discount bond is treated as ordinary income on the disposition of the
property received in exchange therefor, limited (pursuant to the Committee
Reports) to the extent of the gain thereon.

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<PAGE>

A Holder of a Claim that has accrued market discount should not be
required to recognize that accrued market discount as ordinary income when the
Holder exchanges that instrument for property received in the Exchange except to
the extent of any realized gain which is recognized from the receipt of cash
(other than cash received which is attributable to accrued but unpaid interest
with respect to the Claim); rather the unrecognized portion of any accrued
market discount should be allocated to the property received in the Exchange
(this conclusion may depend on the issuance of as-yet unissued implementing
regulations). Although no regulations or rules have been provided to determine
how such accrued market discount should be allocated, the accrued market
discount should be allocated in the same manner as tax basis is allocated. The
portion of the accrued market discount allocated to property received in the
Exchange will be treated as ordinary income at the disposition of such new
property, but not in excess of the total gain recognized.

Holders should consult their own tax advisors regarding the amount of
any market discount, if any, accrued with respect to their property received or
that may be treated as carried over from their Claim.

TAX EFFECTS TO THE HOLDERS OF SERIES B PREFERRED STOCK. Pursuant to the
Plan, the Holders of the Series B Preferred Stock will receive cash equal to the
unpaid dividends which have accrued with respect to the Series B Preferred
Stock. The amount of cash received in satisfaction of the accrued but unpaid
dividends will be treated as ordinary income to the Holders of Series B
Preferred Stock.

TAX EFFECTS TO HOLDERS OF OLD SERIES C AND OLD SERIES D PREFERRED
STOCK. Pursuant to the Plan, the Holder of the Old Series C and Old Series D
Preferred Stock will receive New Series C and New Series D Preferred Stock
respectively, in exchange for their Old Preferred Stock, plus an amount of cash
equal to the unpaid dividends which have accrued with respect to the Old Series
C and Old Series D Preferred Stock. As a result of these exchanges, the Holder
of the Old Series C and Series D Preferred Stock should not recognize any gain
or loss on the exchanges except for the cash received which is attributable to
the accrued but unpaid dividends. The amount of cash received in satisfaction of
the accrued but unpaid dividends will be treated as ordinary income to the
Holder of the Old Series C and Series D Preferred Stock.

THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
IS FOR GENERAL INFORMATION PURPOSES ONLY AND IS NOT TAX ADVICE. ACCORDINGLY,
EACH HOLDER SHOULD CONSULT ITS TAX ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES
OF THE PLAN DESCRIBED HEREIN AND THE APPLICATION OF STATE, LOCAL AND FOREIGN TAX
LAWS. NEITHER THE PROPONENTS NOR THEIR PROFESSIONALS SHALL HAVE ANY LIABILITY TO
ANY PERSON OR HOLDER ARISING FROM OR RELATED TO THE FEDERAL, STATE OR LOCAL TAX
CONSEQUENCES OF THE PLAN OR THE FOREGOING DISCUSSION.

IX. ALTERNATIVES TO CONFIRMATION AND CONSUMMATION OF THE PLAN

If the Plan is not confirmed and consummated, the alternatives include
(a) confirmation of the Creditors' Committee Plan (as defined below) or some
other alternative chapter 11 plan or (b) conversion of the Chapter 11 Case to a
liquidation under chapter 7 of the Bankruptcy Code.

A. ALTERNATIVE CHAPTER 11 PLANS

On December 20, 1999, the Official Committee of Unsecured Creditors of
CMI filed its proposed Plan of Reorganization (the "Creditors' Committee Plan")
and related proposed Disclosure Statement (the "Creditors' Committee Disclosure
Statement"). The Creditors' Committee Plan provides for the liquidation of the
assets of CMI, CMM and Holdings through the use of numerous liquidating trusts
which are controlled by representatives of various holders of claims. More
detailed information regarding the Creditors' Committee Plan and the Creditors'
Committee Disclosure Statement may be obtained by reference to such documents.

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<PAGE>

If the Plan is not confirmed, the Court may consider confirmation of
the Creditors' Committee Plan, or the Debtors or any other party in interest
could attempt to formulate an alternative chapter 11 plan or plans. In
formulating and developing the Plan, the Debtors and the CMI Equity Committee
have explored numerous other alternatives and engaged in negotiations with
various parties holding disparate interests. The consideration of these plan
alternatives resulted in the formulation of the Plan. The Debtors and the CMI
Equity Committee believe that the Plan deals fairly with the rights of Holders
of the various classes of Claims and enables creditors to realize the greatest
recovery possible under the circumstances. The Debtors and the CMI Equity
Committee further believe that rejection of the Plan in favor of liquidation
under the Creditors' Committee Plan or some alternative method of restructuring
the Claims of the various classes will not result in a better recovery for any
Class, will diminish value and will require, at the very least, an extensive,
time-consuming and expensive negotiation and/or litigation process.

B. LIQUIDATION UNDER CHAPTER 7

Another alternative to confirmation and consummation of the Plan is
liquidation of the Debtors under chapter 7 of the Bankruptcy Code. Section
1129(a) of the Bankruptcy Code provides that the Bankruptcy Court may confirm a
plan only if the requirements contained in such section are met. One of these
requirements is that each non-accepting holder of an allowed claim or an allowed
interest in an impaired class must receive or retain under the plan on account
of such claim or interest property having a value as of the effective date of
the plan at least equal to the value that such holder would receive if the
debtor were liquidated under chapter 7 of the Bankruptcy Code on the effective
date of the Plan. The Debtors have prepared the Liquidation Analysis attached
hereto as Exhibit C. Based upon such Liquidation Analysis and after taking into
account the settlements and compromises contained in the Plan, the Debtors and
the CMI Committee do not believe that Holders of Claims and Interests would
receive greater recoveries if the Debtor were to be liquidated under chapter 7
of the Bankruptcy Code.

X. CONCLUSION AND RECOMMENDATION

The Debtors and the Official Committee of Equity Security Holders
believe that confirmation and implementation of the Plan is in the best
interests of all creditors and equity security holders and is clearly preferable
to liquidation of CMI, CMM and Holdings under the Creditors' Committee Plan or
any of the alternatives described above because it will provide the greatest
recoveries to Holders of Claims and Interests. In addition, other alternatives
would involve significant delay, uncertainty and substantial additional
administrative costs. For these reasons, the Debtors and the Official Committee
of Equity Security Holders urge you to return your ballot accepting the Debtors'
Amended Plan.

Dated: December 23, 1999 Respectfully submitted,

CRIIMI MAE INC.,
a Maryland Corporation

By: /s/
----------------------------
Name: William B. Dockser
Title: Chairman

CRIIMI MAE MANAGEMENT, INC.,
a Maryland Corporation

By: /s/
----------------------------
Name: William B. Dockser
Title: Chairman

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<PAGE>

CRIIMI MAE HOLDINGS II, L.P. ,
a Delaware Limited Partnership

By: CRIIMI MAE INC.
Its General Partner

By: /s/
----------------------------
Name: William B. Dockser
Title: Chairman

VENABLE, BAETJER AND HOWARD, LLP

By: /s/
----------------------------
Richard L. Wasserman
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201
(410) 244-7400

Co-Counsel for CRIIMI MAE Inc. and
CRIIMI MAE Holdings II, L.P.

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<PAGE>

AKIN GUMP STRAUSS HAUER & FELD LLP

By: /s/
----------------------------
Stanley J. Samorajczyk
1333 New Hampshire Avenue, N.W.
Washington, D.C. 20036
(202) 887-4000

Co-Counsel for CRIIMI MAE Inc. and
CRIIMI MAE Holdings II, L.P.

SHULMAN, ROGERS, GANDAL, PORDY & ECKER, P.A.

By: /s/
----------------------------
Morton A. Faller
11921 Rockville Pike
Third Floor
Rockville, MD 20852-2753
(301) 231-0928
Counsel for CRIIMI MAE Management, Inc.

CO-PROPONENT:

Official Committee of Equity Security Holders
of CRIIMI MAE Inc.

By: /s/
----------------------------
Name: Michael F. Wurst
Title: Co-Chairman

COVINGTON & BURLING

By: /s/
----------------------------
Michael St. Patrick Baxter
Dennis B. Auerbach
1201 Pennsylvania Ave., NW
Washington, D.C. 20044
(202) 662-6000

Counsel for the Official Committee of
Equity Security
Holders of CRIIMI MAE Inc.

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<PAGE>

EXHIBIT A

JOINT PLAN OF REORGANIZATION

A-1

<PAGE>

EXHIBIT B

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

[To be supplied before Disclosure Statement hearing
based upon then available financial information.]

PROJECTED FINANCIAL INFORMATION

[To be supplied before Disclosure Statement hearing
based upon then available financial

information and projections based thereon.]

B-1

<PAGE>

EXHIBIT C

LIQUIDATION ANALYSIS

Section 1129(a) of the U.S. Bankruptcy Code states that the court shall confirm
a plan of reorganization only if certain requirements are met. One of these
requirements (Section 1129(a) (7) (A) (ii)) is that with respect to each
impaired class of claims or interests, each holder of a claim or interest of
such class must accept the plan or receive or retain property of a value, as of
the Effective Date of the plan, that is not less than the amount that holders of
such claims or interests would receive or retain if the Debtors were liquidated
under chapter 7 on such date.

As previously disclosed in section III of the Disclosure Statement, CERTAIN RISK
FACTORS, the value of the Debtors' Subordinated CMBS and other mortgage assets
can change due to a number of economic factors. These factors include changes in
the underlying real estate, fluctuations in U.S. Treasury rates, and changes in
required rates of return for purchasing Subordinated CMBS and other mortgage
assets. The Company's management believes that only a limited number of
investors currently exist with the real estate expertise, infrastructure, and
available capital required to evaluate and execute an acquisition of the
Debtors' Subordinated CMBS and other mortgage assets. Furthermore, there is
currently no active secondary market for the Debtors' Subordinated CMBS and
other mortgage assets. The size of the Debtors' portfolio, the unprecedented
nature of a liquidation of such portfolio, and the limited liquidity of the
secondary CMBS market results in uncertainty in the valuation of the Company's
portfolio of Subordinated CMBS and other mortgage assets. The Company's
management has prepared its liquidation analysis (the "Liquidation Analysis")
assuming the Company is unable to preserve its REIT status and a court appointed
trustee liquidates the assets of the Debtors' estate not in a "firesale", but
over a period of approximately six months (see Significant Assumptions in the
Notes to Liquidation Analysis).

Underlying the Liquidation Analysis are a number of estimates and assumptions
that, although formulated and considered reasonable by the Debtors, are
inherently subject to significant economic, competitive, and other uncertainties
and contingencies beyond the control of the Debtors. The Liquidation Analysis is
also based on assumptions with regard to liquidation decisions that are subject
to change. ACCORDINGLY, THERE CAN BE NO ASSURANCE THAT THE VALUES REFLECTED IN
THIS LIQUIDATION ANALYSIS WOULD BE REALIZED IN A CHAPTER 7 CASE. ACTUAL RESULTS
COULD VARY MATERIALLY FROM THOSE SHOWN HEREIN.

The Liquidation Analysis has been prepared solely for the purpose of estimating
the distributable liquidation proceeds available in a hypothetical chapter 7
case and does not necessarily represent values that may be appropriate for any
other purpose. The independent public accountants of the Company have neither
examined nor compiled or provided any assurance report on the Liquidation
Analysis thereon in accordance with Generally Accepted Auditing Standards.

C-1

<PAGE>

CRIIMI MAE INC.
LIQUIDATION ANALYSIS
SEE ACCOMPANYING NOTES TO LIQUIDATION ANALYSIS

Liquidation Estimated Recovery
Proceeds Allowed Claims Recovery Percentage
----------- -------------- -------- ----------

ASSETS:
Cash (1) $169,479,435
Sale of Investments (2) $719,366,163
Other assets (3) $68,330,339
-------------------
Liquidation Value of Assets $957,175,937
-------------------

CHAPTER 7 ADMINISTRATIVE EXPENSE:
Tax Liabilities (4) $ (66,000,000) $ (66,000,000) 100%
Professionals (5) $ (6,000,000) $ (6,000,000) 100%
Trustee fees (6) $ (9,477,080) $ (9,477,080) 100%
Operating expenses (7) $ (2,984,502) $ (2,984,502) 100%

CHAPTER 11 ADMINISTRATIVE AND PRIORITY CLAIMS:
Professionals (8) $ (16,762,000) $ (16,762,000) 100%
Other (9) $ (9,557,398) $ (9,557,398) 100%

SECURED DEBT (10) $ (760,926,120) $ (760,926,120) 100%

UNSECURED CLAIMS (11) $ (206,366,589) $(85,468,837) 41%

------------------
TOTAL ESTIMATED CASH AVAILABLE FOR EQUITY
DISTRIBUTION $ 0

------------------

EQUITY:
Preferred Stock: (12)
Series B $ 0 0%
Series C $ 0 0%
Series D $ 0 0%
Series F (Dividend Preferred) $ 0 0%

------------------
Available cash for distribution to Common
Shareholders $ 0
------------------

Common Shares Outstanding (13) 59,954,604
------------------

Cash distribution per Common Share $ 0 0%
------------------

</TABLE>

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<PAGE>

NOTES TO LIQUIDATION ANALYSIS

SIGNIFICANT ASSUMPTIONS

The following notes describe the significant assumptions that are reflected in
the Liquidation Analysis:

LOSS OF REIT STATUS THROUGH FORCED LIQUIDATION SIGNIFICANTLY REDUCES
RECOVERABILITY TO CREDITORS AND SHAREHOLDERS

The Liquidation Analysis assumes that CRIIMI MAE is not able to distribute
sufficient cash in 1999 or 2000 to satisfy REIT distribution requirements and,
therefore, is unable to preserve its REIT status. In addition, due to the loss
of REIT status, the Company's taxable mortgage pools ("TMPs") are assumed to
lose their qualified REIT subsidiary ("QRS") exemptions and are treated as
separate tax-paying entities. As a result of the loss of REIT status and the QRS
exemptions, the aggregate liquidating distribution, as reflected herein, has
been significantly diminished by corporate federal and state income tax
liabilities (including penalties and interest).

The amount of cash available for distribution for both 1999 and 2000 could be
significantly increased if the Company's REIT status were preserved. The
Company's ability to maintain its REIT status through the adequate distribution
of dividends (among other requirements) could increase the ultimate recovery to
the unsecured creditors by preserving the tax-advantaged status of the taxable
mortgage pools currently owned by the Company. Based upon management's
assumptions, it is currently estimated that the loss of the Company's REIT
status results in a reduction in the liquidation proceeds of approximately $110
million from the sale of CBO-1, CBO-2, and CMO-IV (collectively the "Trusts") as
TMPs. This reduction results in a decrease in the ultimate recovery of the
unsecured creditors' allowed claims, assuming REIT status had been preserved, to
approximately $85 million as reflected in the Liquidation Analysis set forth
above. The following paragraphs describe the risks associated with the Company's
loss of its REIT status:

DEVALUATION OF THE CMBS ASSETS DUE TO TMP RISK. An entity that
constitutes a "taxable mortgage pool" as defined in the Tax Code is
treated as a separate corporate level taxpayer for federal income tax
purposes. In general, for an entity to be treated as a TMP: (i)
substantially all of the assets must consist of debt obligations and a
majority of those debt obligations must consist of mortgages; (ii) the
entity must have more than one class of debt securities outstanding
with separate maturities, and (iii) the payments on the debt
securities must bear a relationship to the payments received by the
TMPs. Based on this definition, CBO-1, CBO-2 and CMO-IV (collectively
the "Trusts") are TMPs. The statutory provisions and regulations
governing the tax treatment of TMPs (the "TMP Rules") provide an
exemption for TMPs whose equity interests are wholly owned by a REIT
(a qualified REIT subsidiary or "QRS"). Since it is assumed that the
Company's REIT status is not maintained for 1999 or 2000, the Trusts
would no longer qualify for the exemption granted to a QRS and the
Trusts would be required to pay a separate corporate level tax on
income derived from their underlying mortgage assets. As a result of
the tax on the TMPs, available funds from the underlying mortgage
assets that would ordinarily be used by the Trusts to make payments on
certain securities issued by the Trust (including the equity
interests) would instead be applied to satisfy corporate federal and
state income tax liabilities. Since the equity interests and bonds
owned by the Company are the most subordinated securities of the
Trusts and are the first to absorb payment shortfalls, the loss of the
QRS exemption under the TMP rules would have a material adverse effect
on the payments received on these securities and the liquidation value
of the Trusts.

The Company's aggregate estimated tax liability (i) has been
calculated on a consolidated basis, (ii) assumes the Company loses its
REIT status, and (iii) assumes that the TMPs lose their QRS exemptions
and are taxed as separate taxpaying entities. Under this scenario,
CRIIMI MAE would likely recognize a taxable loss, while each TMP would
have positive taxable income as

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<PAGE>

separate corporations. The taxable income associated with CBO-1,
CBO-2, and CMO-IV is estimated at $110 million for all of 1999 and $55
million for the first six months of 2000. The $165 million of taxable
income, which can not be off-set by CRIIMI MAE's taxable losses, would
give rise to an aggregate tax liability of approximately $66 million
through liquidation, thereby reducing cash available for distribution
to unsecured creditors and shareholders.

THE LIQUIDATION PERIOD

This Liquidation Analysis assumes a chapter 7 case as of January 1, 2000 that
involves a six-month liquidation of all assets through June 30, 2000 (the
"Liquidation Period"). Cash proceeds from the sale of each asset are used to
retire, to the extent of available funds, any related secured debt at the time
the assets are sold, with excess cash accumulated in an interest bearing account
for the payment of the remaining liabilities in June 2000.

LIQUIDATION ANALYSIS PREPARED ON A CONSOLIDATED BASIS FOR THE DEBTOR ENTITIES

The Liquidation Analysis assumes the liquidation of CRIIMI MAE Inc. and its
consolidated debtor and non-debtor subsidiaries (which includes CRIIMI MAE
Management, Inc. and CRIIMI MAE Holdings II, L.P.). With respect to CRIIMI MAE
Management, Inc. and CRIIMI MAE Holdings II, L.P., the following summarizes the
results of a chapter 7 liquidation of those entities:

CRIIMI MAE MANAGEMENT, INC. ("CRIIMI MAE MANAGEMENT")

The total pre- and post-petition liabilities of CRIIMI MAE Management as of
September 30, 1999 were approximately $10.5 million. The total estimated
liquidation value of the assets of CRIIMI MAE Management as of September 30,
1999 was in excess of $13 million. Accordingly, in a chapter 7 liquidation of
CRIIMI MAE Management, it is estimated that all pre- and post-petition creditors
would be paid in full and all administrative expenses in the chapter 7 case
would also be paid in full, with a net residual value available to the estate of
CRIIMI MAE Inc. as the shareholder of CRIIMI MAE Management.

CRIIMI MAE HOLDINGS II, L.P. ("CRIIMI MAE HOLDINGS")

THE ASSETS OF CRIIMI MAE HOLDINGS (THE RETAINED INVESTMENT GRADE SECURITIES
("BBB/BBB-") FROM CMO-IV) WERE SOLD IN OCTOBER 1999 UNDER THE TERMS OF A
STIPULATION AND ORDER ENTERED BY THE BANKRUPTCY COURT, WITH THE PROCEEDS THEREOF
PAYING OFF THE OUTSTANDING INDEBTEDNESS OF CRIIMI MAE HOLDINGS WITH RESPECT
THERETO. ACCORDINGLY, THE DEBTOR BELIEVES THAT THERE ARE NO REMAINING CREDITORS
OF CRIIMI MAE HOLDINGS OR ASSETS TO BE LIQUIDATED IN A CHAPTER 7 CASE.

NOTES

The following are the footnote explanations related to the Liquidation Analysis:

1. The cash balance represents the Company's consolidated cash balance of
approximately $87.5 million as of September 30, 1999 adjusted for
approximately $82.0 million of net investment income the Company expects to
earn from October 1, 1999 through the end of the Liquidation Period. The
net investment income is comprised of the Company's net interest margin on
its mortgage assets and earnings from its equity investments. This amount
also includes short-term interest income related to cash on hand, at an
assumed rate of 5%. The net investment income does not include any
administrative expenses, which are accounted for below.

2. Sale of investments represents the Company's estimate of the proceeds it
would receive related to the sale of its investments under this Liquidation
Analysis. The following details the assumptions used to

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<PAGE>

calculate proceeds from the sale of these investments:

(a) SUBORDINATED CMBS: The Company's management used the same discounted
cash flow methodology as used in its Form 10-K and 10-Q filings as of December
31, 1998 and September 30, 1999, respectively, in determining the sale proceeds
for its Subordinated CMBS during the Liquidation Period. The cash flows were
discounted using a discount rate that, in the Company's view, was commensurate
with the market's perception of risk of comparable assets as of December 1999,
and included an estimate for the market effect associated with the Company's
portfolio liquidation. The Company used a variety of sources to determine its
discount rate including institutionally-available research reports and
communications with dealers and active Subordinated CMBS investors regarding the
valuation of comparable securities. The proceeds from the sale of such CMBS were
derived using the following assumptions:

(i) The proceeds were calculated for those CMBS investments in which
the Company had an economic interest as of September 30, 1999,
except for the retained investment grade securities ("BBB/BBB-")
from CMO-IV, which were sold in October 1999 under the terms of a
Stipulation and Order for an amount slightly in excess of the
associated secured obligation. Any match-funded CMBS assets and
corresponding match-funded liabilities were excluded from this
Liquidation Analysis.

(ii) The CMBS and related servicing rights for each issuance were
assumed to be sold jointly and in their entirety, and are net of
a broker's fee equal to 62.5 basis points of the gross sale
proceeds.

(iii) All non-CRIIMI MAE issued CMBS assets were priced assuming a 0%
CPR (Constant Prepayment Rate) and 0% CDR (Constant Default Rate)
since the inherent risks associated with defaults and losses are
accounted for in the spreads and discount rates used to determine
the gross sale proceeds. These assumptions are consistent with
the valuation methodology used for quarterly SEC reporting and
market convention for the sale of such securities.

(iv) The retained securities from CBO-1, CBO-2 and CMO-IV were priced
assuming CRIIMI MAE loses its REIT status retroactive to January
1, 1999. Accordingly, these Trusts become subject to corporate
federal and state income tax liabilities as a result of the loss
of the QRS exemptions for the TMPs. The gross taxable earnings
for each Trust were computed using the original pricing speeds
and current tax yields on the underlying collateral. The
deductible payments from each Trust were computed based upon the
original pricing speeds and current tax yields of the securities
that were issued by each Trust. Any excess taxable income over
the deductible payment from each Trust represents the net taxable
income of that Trust. It was further assumed that each Trust
would pay corporate federal and state income taxes at an
aggregate effective tax rate of 40%. The gross cash flow for each
Trust was reduced by the associated tax liability and all
remaining cash flow was allocated to each security in accordance
with the payment priorities as detailed in the respective pooling
and servicing agreements. The resulting cash flows on securities
held by the Company were then discounted using yields derived as
discussed in 2.(a)(v), (vi), and (vii) below.

(v) The Company's management projected the U.S. Treasury curve for
the assumed future sale dates using a forward rate curve
extracted from Bloomberg. An appropriate U.S. Treasury rate was
then interpolated based on the projected U.S. Treasury curve and
weighted-average life of each CMBS.

(vi) Credit spreads for comparably rated CMBS were derived from the
sources cited in 2.(a) above and adjusted based on qualitative
and quantitative factors, such as the market's perception of the
issuers and the credit fundamentals of the commercial real estate
underlying each pool of commercial mortgage loans.

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<PAGE>

(vii) Credit spread adjustments, ranging from 150 to 600 basis points,
were added to credit spreads determined in 2.(a)(vi) above in
determining the appropriate discount rate for each CMBS owned by
the Company. These incremental adjustments reflect yield premiums
that would likely occur if a portfolio of this size were
unexpectedly sold in the secondary market during the first and
second quarters of 2000.

(b) INSURED MORTGAGE SECURITIES: For each of the residual economic
interests in CMO-I, CMO-II, and CMO-III, CRIIMI MAE used pricing assumptions
consistent with those used by typical buyers of such securities. Accordingly,
the sale proceeds were computed assuming a pricing speed of 100% CPR after the
expiration of any lockout and yield maintenance period on the underlying
mortgage securities. The projected cash flows were discounted at a credit spread
of 600 basis points over the interpolated U.S. Treasury rate as of the assumed
sale date. The sale proceeds for the residual interests are net of a broker's
fee equal to 62.5 basis points of the gross sale proceeds.

The Company's only non-securitized GNMA MBS, was priced to sell at 80%
of its face amount and is net of a broker's fee equal to 62.5 basis
points of the gross sale proceeds.

The value of the AIM general partner ("GP") investment was
determined by dividing the value of the publicly traded
Limited Partnership ("LP") units, as extracted from Bloomberg,
by the LP's interest and multiplying the result by each GP's
interest (ranging from 2.9% to 4.9%). The assumed value of
each GP interest was compared to its indirect ownership
interest in the mortgage loans underlying each fund and
further reduced based on a assumed 20% per annum run-off rate
of the underlying mortgage assets. An additional discount of
45% was applied to reflect the liquidity premium that may be
associated with the liquidation of the Company and the risk of
owning a GP interest.

CRIIMI MAE Services, L.P. (servicing affiliate) is assumed to continue
to operate through June 2000. I(It should be noted, however, that this
assumption may not be achievable due to the potential loss of key
personnel in a chapter 7 scenario.) Servicing assets, consisting
primarily of servicing contracts, were assumed to be sold in connection
with the sale of the related CMBS. Proceeds from the sale of the
special servicing rights have been included in the sale proceeds of the
related CMBS, as the purchaser of the controlling class has the right
to appoint the special servicer.

3. Other Assets include the following:

(a) The Company's mezzanine loans were assumed to be sold at 70% of their
face amount to reflect the credit risk associated with owning these
assets. As of December 1, 1999, CRIIMI MAE owned approximately $7.5
million (face amount) of mezzanine loans. The proceeds are net of a
broker's fee equal to 62.5 basis points of the gross sale proceeds.

(b) Brick Church (REO) was assumed to be sold for a net amount equal to
the associated secured obligation of the property, and is net of a 3%
broker's fee based on the gross sale proceeds.

(d) The Company has assumed the collection of certain receivables.

4. The aggregate taxable income associated with CBO-1, CBO-2, and CMO IV,
estimated at $110 million for 1999 and $55 million for the first six months
of 2000, would give rise to an aggregate corporate tax liability of
approximately $44 million in 1999 and $22 million for the first six months
of 2000.

5. This amount includes the professional expenses required to liquidate the
Company and perform other functions for the Trustee during the chapter 7
case. The amount approximates 50% of the average

C-6

<PAGE>

quarterly run-rate of professional fees incurred through September 30, 1999
by the Company during its chapter 11 proceedings.

6. This amount represents the fees of the chapter 7 Trustee. Although the
chapter 7 Trustee could receive up to 3% of the estate proceeds distributed
to creditors, chapter 7 Trustee fees have been estimated at 1% of payments
made to creditors due to the large size of the Debtors' estate.

7. Unlike most chapter 7 scenarios, the nature of the Debtors assets will
require that the chapter 7 Trustee retain critical employees and operate
the Company, on a reduced basis, during the Liquidation Period. Operating
expenses are assumed to be reduced by 50% during the period of liquidation
as compared to actual 1999 expenses incurred through September 30, 1999.
This is primarily a result of the reduction of the workforce upon the
adoption of a plan of liquidation.

8. This amount includes the professional fees incurred during the Debtors'
chapter 11 cases that have not been paid, as well as estimated professional
fees to be incurred by the Company through January 1, 2000.

9. This amount includes the following: (1) payment of post-petition trade
payables, (2) estimated payment of severance to employees terminated upon
liquidation and retention bonus payable to remaining employees, and (3)
other ongoing operating costs through January 1, 2000. The estimated
operating costs are consistent with actual costs incurred through September
30,1999.

10. Secured debt includes variable rate secured borrowings, other secured
financing facilities and accrued and unpaid interest as of September 30,
1999, at contractual, non-default rates. From October 1, 1999 through June
30, 2000, it is assumed that interest is paid on a current basis at
contractual, non-default rates.

11. Unsecured claims include senior unsecured notes, other unsecured financing
facilities, trade payables, and other unsecured claims.

12. The Liquidation Analysis references the Series F Preferred Stock
distributed in the fourth quarter of 1999 for the distribution of the
remaining 1998 taxable income, of which 756,453 shares were converted into
common stock in November 1999. From January 1, 1999 to June 30, 2000, no
dividends are assumed to bepaid and no additional preferred shares or
options are assumed to be converted into common stock. The number of shares
of Series B, C, D, and F outstanding as of December 15, 1999 was 1,593,982,
103,000, 100,000, and 850,142, respectively.

13. The number of shares of common stock outstanding as of December 15, 1999
was 59,954,604.

C-7

<PAGE>

EXHIBIT D

INDEX TO FINANCIAL STATEMENTS

PAGE
- ----

<S> <C>

CRIIMI MAE Financial Statements:

Annual Report on Form 10-K

Report of Independent Public Accountants..................................................................

Consolidated Balance Sheets as of December 31, 1998 and 1997..............................................

Consolidated Statements of Income for the years ended December 31, 1998, 1997 and 1996................

Consolidated Statements of Changes in Shareholders' Equity for the years ended December 31, 1998, 1997
and 1996........ .....................................................................................

Consolidated Statements of Cash Flows for the years ended December 31, 1998, 1997 and 1996............

Notes to Consolidated Financial Statements................................................................

Quarterly Report on Form 10-Q

Consolidated Balance Sheets - as of September 30, 1999
(unaudited) and December 31, 1998.....................................................................

Consolidated Statements of Income and Comprehensive Income - for the three
and nine months ended September 30, 1999 and 1998 (unaudited).........................................

Consolidated Statements of Changes in Shareholders' Equity - for the nine
months ended September 30, 1999 (unaudited)...........................................................

Consolidated Statements of Cash Flows - for the nine months ended
September 30, 1999 and 1998 (unaudited)...............................................................

Notes to Consolidated Financial Statements (unaudited)....................................................

[To be provided on or before the Disclosure Statement hearing.]

</TABLE>

D-1

<PAGE>

Exhibit 99.2

Susan B. Railey
For shareholders and securities brokers
(301) 468-3120
Andrew P. Blocher
For institutional investors
(301) 231-0371
James T. Pastore FOR IMMEDIATE RELEASE
For news media
(202) 546-6451

CRIIMI MAE FILES AMENDED JOINT PLAN OF REORGANIZATION
AND DISCLOSURE STATEMENT

------------------

ROCKVILLE, MD, December 23, 1999 - CRIIMI MAE Inc. (NYSE:CMM) and its affiliates
CRIIMI MAE Holdings II, L.P. and CRIIMI MAE Management, Inc. today filed their
Amended Joint Plan of Reorganization (the "Plan") and proposed Disclosure
Statement with the United States Bankruptcy Court, District of Maryland,
Greenbelt Division (the "Bankruptcy Court"). The Plan was filed with the full
support of the Official Committee of Equity Security Holders, which is a
co-proponent of the Plan. Merrill Lynch Mortgage Capital Inc. ("Merrill Lynch")
and German American Capital Corporation ("GACC"), two of the Company's largest
secured creditors, would provide exit financing under the Plan as part of the
recapitalization of the Company.

The Plan contemplates total recapitalization financing aggregating at least $873
million (the "Recapitalization Financing"). Under the amended Plan, Merrill
Lynch and GACC would remain secured creditors and would provide a significant
portion of CRIIMI MAE's Recapitalization Financing. Additional Recapitalization
Financing would be obtained from other existing debtholders and from the sale of
the same commercial mortgage-backed securities ("CMBS") that were to be sold
pursuant to the Joint Plan of Reorganization filed by CRIIMI MAE and its
affiliates with the Bankruptcy Court on September 22, 1999. CRIIMI MAE and its
affiliates may seek new equity capital from one or more investors although new
equity is not required to fund the Plan.

The Company is filing a Form 8-K with the Securities and Exchange Commission,
which will include the Plan and proposed Disclosure Statement as exhibits. The
Company's proposed Disclosure Statement is subject to approval by the Bankruptcy
Court after notice and a hearing. No date has yet been set for a disclosure
statement hearing.

<PAGE>

On December 20, 1999, the Official Committee of Unsecured Creditors of CRIIMI
MAE Inc. filed its own plan of reorganization and proposed disclosure statement
which, in general, provide for the liquidation of the assets of the Company and
its debtor affiliates through the use of various liquidating trusts which would
be controlled by representatives of various holders of claims.

The above discussion of the plans is qualified in their entirety by reference to
the entire plans.

On October 5, 1998, the Company and two affiliates filed for protection under
Chapter 11 of the U.S. Bankruptcy Code. Before filing for reorganization, the
Company had been actively involved in acquiring, originating, securitizing and
servicing multi-family and commercial mortgages and mortgage related assets
throughout the United States. Since filing for Chapter 11 protection, CRIIMI MAE
has suspended its loan origination, loan securitization and CMBS acquisition
businesses. The Company continues to hold a substantial portfolio of
subordinated CMBS and, through its servicing affiliate, acts as a servicer for
its own as well as third party securitizations.

More information on CRIIMI MAE is available on its web site -
WWW.CRIIMIMAEINC.COM - or for investors, call Susan Railey, 301-468-3120, for
institutional investors, call Andy Blocher 301-231-0371 or for news media, call
Jim Pastore, 202-546-6451.

Note: Except for historical information, forward-looking statements contained in
this release involve a variety of risks and uncertainties. These risks and
uncertainties include the continued instability of the capital markets, the
ability of the Company to obtain and complete reorganization financing,
including but not limited to its restructured debt and the sale of selected CMBS
to a party or parties for sufficient proceeds, the ability to obtain new equity
should it be determined by the Company to proceed with new equity as part of the
Plan, the ability of relevant parties to finalize and execute the constituent
documents called for by the Plan, the ability to obtain bankruptcy court
approval of a disclosure statement, the possible confirmation of an alternative
plan of reorganization filed by the Official Committee of Unsecured Creditors of
CRIIMI MAE Inc. or any other party in interest, the trends in the CMBS market,
competitive pressures, the effect of future losses on CRIIMI MAE's need for
liquidity, confirmation and effectiveness of the Company's Plan, the effects of
the bankruptcy proceeding on CRIIMI MAE's ongoing business, the actions of
CRIIMI MAE's creditors and equity security holders, and the outcome of
litigation to which the Company is a party, as well as the risks and
uncertainties that are set forth from time to time in CRIIMI MAE's SEC reports,
including its report on Form 10-K for the year ended December 31, 1998 and its
Form 10-Q for the quarter ended September 30, 1999.

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